How to Protect Your Savings from Market Fluctuations During Financial Crises

The strategy for protecting savings is primarily based on the principle of capital preservation, focusing on physical assets and avoiding increasing structural risks in the global financial system. Economist Mazen Ershid believes that the main goal for ordinary savers during economic crises should be to protect the value of their money, rather than seeking large profits, as unstable markets can lead to price declines faster than increases. Therefore, it is preferable to reduce risks and maintain savings.

The outlook for global economic growth remains shaky, despite expectations of accelerated growth in 2026, due to ongoing uncertainty and the impact of trade wars.

Additionally, the massive dollar printing during the COVID-19 pandemic has led to high inflation rates in the United States, resulting in a sharp divergence between growth indicators and increasing structural risks.

According to the Global Financial Stability Report released by the IMF in October, the report warns of excessively high asset valuations, increasing the likelihood of sharp price corrections.

There are also growing pressures on sovereign bond markets, raising doubts about heavily indebted countries' ability to cope.

The rising role of non-bank financial institutions, such as private credit companies, raises concerns due to their exposure to higher risks with lower regulatory levels compared to traditional banks, which could negatively impact the traditional banking sector in the event of any failures.

Due to chronic inflation, bonds have lost their appeal as a safe haven.

U.S. 10-year Treasury bonds lost about 18% of their value, while U.S. corporate bonds lost approximately 15.5% in 2022. Between 2024 and 2025, confidence in bonds declined, and yields rose sharply due to U.S. debt and political division.

Yields on U.S. 10-year bonds surged to over 5.2% in mid-2024, the highest since 2007, raising doubts about the U.S.'s ability to service its debt. These losses have disrupted the long-standing relationship between bonds and stocks.

Regarding stocks, Ershid advises against purchasing shares for those lacking investment experience, particularly in artificial intelligence companies trading at unprecedented high price-to-earnings multiples.

The rise of gold to a historic level above $4,000 per ounce reflects concerns over financial stability and is traditionally considered a safe haven.

However, it should be held physically to ensure direct ownership.

Ershid recommends allocating 10% to 15% of savings for gold purchases as a protective measure. Avoid keeping cash in banks unnecessarily, as crises may lead to loss.

Safe asset diversification, such as investing in land and real estate, is essential.

In conclusion, Ershid advises against speculation and encourages reliance on safe investments, distributing funds among cash liquidity, gold, and short-term bonds, while keeping part of the savings in strong currencies like the U.S. dollar.