What are safe haven assets – and should you invest in them?
With global markets in turmoil, safe haven assets like gold and cash can offer stability. Learn how these investments help protect your portfolio during times of economic uncertainty.
This article is not advice. If you would like to receive advice on your savings and investments, consider speaking to a Financial Adviser.
Global stock markets have been in turmoil in recent weeks. Markets in the US and the UK have seen some of their sharpest swings since the pandemic.
At the heart of the current volatility is one announcement: a new wave of US tariffs.
If you’re tempted to ‘sell on the dip’ of the market, it might be worth considering safe haven assets as a more stable alternative to stocks. But what exactly is a safe haven asset – and how can it help protect your portfolio?
In this article, we’ll break down what safe haven assets are, explore some of the most popular options, and weigh their key pros and cons.
Impact on the stock market
President Trump’s decision to impose import tariffs has triggered a global stock sell-off – with the S&P 500 losing more than 10% in three days. That’s a drop almost as steep as the declines seen during the 2008 financial crisis and the Covid crash.
The FTSE 100 and FTSE 250 have also suffered heavy losses, as investors around the world respond to mounting fears of a global economic slowdown.
The state of the economy
The US’s decision to raise tariffs is already reshaping global forecasts. Economists expect UK growth to drop below 1% this year, down from the earlier forecast of 1.5%.
The Bank of England is still expected to reduce interest rates gradually. Until recently, economists forecast two base rate cuts this year – bringing it down to 4%. Now, that path has shifted. Markets expect three cuts in 2025 instead, bringing the base rate to around 3.75% by the end of the year.
What are safe haven assets?
In times of market stress, some assets behave differently. Safe haven assets are investments that tend to keep – or even increase – their value during times of market turmoil.
They’re not about outsized returns. They’re about preserving investments.
Not every safe haven asset works in every scenario. But having a few in your portfolio can act as a buffer when markets slide.
Four examples of safe haven assets
1. Gold
Many investors view gold as the ultimate safe haven, thanks to its stability. During periods of heightened market stress, gold often holds its value.
After the 2008 financial crisis, gold surged nearly 24% in 2009 alone – continuing to rise into 2011 as global uncertainty lingered.
In the current economic climate, gold prices have edged upward again. Some investors see it as a way to diversify away from market volatility. But gold can be unpredictable. Its value doesn’t always rise during every downturn – and it doesn’t generate income.
2. Cash
Cash offers flexibility and protection. During periods of market volatility, many investors turn to high-interest savings accounts to help safeguard their portfolios.
While interest rates continue to outpace inflation, cash continues to be an attractive option. But if inflation rises again, the real value of your cash could erode over time if it’s left to languish in low-interest accounts. Loyalty to old accounts often doesn’t pay off, as many don’t offer competitive rates. If you want your cash to flourish, consider switching to accounts that provide higher interest.
There’s still a variety of strong rates on offer for both short and long-term accounts. If you’re able to lock your cash away for longer, Fixed Term accounts usually offer higher returns.
Savings accounts also come with the added benefit of FSCS protection, which shields up to £85,000 per person, per institution if a bank fails.
3. Government bonds
Investors consider government bonds one of the most secure investments. By buying a bond, you lend money to a government in exchange for regular interest payments.
They offer predictability – and depending on the issuing country, low risk.
In market downturns, government bonds (especially those from stable economies) are often in high demand. But they're not completely risk-free. Their value can fall if interest rates go up or if inflation grows faster than the returns they offer.
4. Defensive stocks
Defensive stocks – like utilities, consumer staples, and healthcare – usually hold up better during economic downturns.
Why? Because demand for their products is consistent. People still need electricity, medicine, and household goods in a recession.
These stocks don’t offer dramatic growth, but they can add stability and dividend income.
Pros and cons of safe haven assets
| Advantages of safe haven assets | Disadvantages of safe haven assets |
| Stability: they tend to be less volatile and more predictable during times of economic crisis. | Lower returns: with lower risk comes lower reward. |
| Diversification: they offer balance in a portfolio alongside higher-risk investments. | Inflation risk: cash in particular can lose real value if inflation outpaces interest rates. |
| Protection: in some cases, safe havens can keep or even gain value when other asset classes decline. | Volatility within the asset: gold, for example, can still experience price fluctuations during times of economic uncertainty. |
Frequently asked question about safe haven assets
What is a safe haven asset?
A safe haven asset is an investment that typically holds or increases its value during times of market volatility or economic downturns.
Why is gold a safe haven asset?
Gold is scarce, tangible, and not tied to central bank policies – which can make it appealing when markets are stressed or currencies are unstable.
Is silver a safe haven asset?
Silver can be a safe haven asset. But it’s a bit more unpredictable than gold because it’s also used a lot in industries, like tech and manufacturing.
What assets are most commonly considered safe havens?
Gold, government bonds, cash, and defensive stocks are all seen as safe haven assets.
Speak to a Financial Adviser about your safe haven options
Choosing the right mix of assets for your portfolio is a personal decision – and there’s no one-size-fits-all approach. What matters is that your investments reflect your goals, risk tolerance, and time horizon.
If you’re unsure what’s right for you, consider speaking to a Financial Adviser.
Shield your investments with safe haven assets
Markets don’t always rise. In moments of collapse – whether triggered by policy decisions, geopolitical conflict, or economic shifts – investors look for shelter.
Safe haven assets can offer that. They won’t eliminate risk entirely, but they can help reduce the impact of short-term volatility.
With so much economic uncertainty on the horizon, it’s worth considering how safe haven assets might fit into your broader financial strategy.
Protect your portfolio – with Flagstone
If you’re prioritising stability in the current market, cash savings can play an important role.
With Flagstone, you can spread your cash between hundreds of accounts from more than 60 banks – all in one platform, with one login. No need to chase rates across multiple sites.
Use our interest rate calculator to discover how much interest your money could be earning.
