Global stock markets have plunged amid fears that Democrat victories in the US midterms will stymie the AI boom.
Market jitters stemmed from concerns that newly elected Democrat senators and governors want to regulate the rapid rollout of data centres that house the semiconductor chips used to power AI.
America's tech-heavy Nasdaq 100 fell by more than 5.5pc on Thursday – the biggest fall since April 2025 – with shares in semiconductor makers the hardest hit. On Friday, the sell-off spread to Asian and European stocks. Japan's Nikkei 225 index dropped 6pc and the FTSE 100 fell almost 2pc.
The downturn was the worst since Donald Trump's so-called "liberation day" in 2025, when he imposed tariffs on trading partners around the world.
So what can you do to protect your cash? Telegraph Money takes a look at how to shield your pension and investments, while making the most of a potential opportunity.
What to do during a sell-off
Stay invested
When stocks fall and you see your portfolio rapidly lose value, you may be tempted to sell your holdings to bank whatever gains you've managed to retain.
But most financial advisers and professional investors warn that this is incredibly damaging. Selling as the market drops risks crystallising losses and cashing out at the bottom of the market, forcing you to buy the same stocks or funds back at a higher price later on.
An adage in investing states that strong returns are generated by "time in the market, rather than timing the market". Even professional traders and seasoned stock pickers sometimes fail to correctly time the right moment to buy and sell.
Research from Fidelity International revealed that missing out on the returns of just five of the market's best-performing days could shave over a third off your portfolio's total returns.
Most investors, therefore, will achieve better returns by holding their nerve and adopting a patient buy-and-hold approach.
Dan Coatsworth, of the stockbroker AJ Bell, said: "There is always uncertainty as to when a rebound will happen, but history shows that staying in the market is a sensible course to take. Market rebounds can happen quickly and those sitting on the sidelines often miss the best days during the bounce back."
It's also worth considering whether the core reason that encouraged you to purchase a share or fund in the first place has changed, or whether stock movements are merely short-term market nerves.
Hugh Gimber, a global market strategist at JP Morgan Asset Management, said: "Ultimately, nothing this week has changed the future demand that we are likely to see for AI , which is still the most important factor for tech stocks.
"As a result, this week's volatility may represent an opportunity for long-term investors who can identify the companies with balance sheets that are strong enough to withstand minor adjustments to the pace of the AI build-out."
Buy and diversify
Although the value of your portfolio might have fallen, market corrections – an event when an index or stock falls more than 10pc – often provide an opportunity to buy when shares are cheaper than their recent value.
If the investment thesis remains strong but share or unit prices have fallen, take the opportunity to buy more. Remember to utilise your £20,000 tax-free Isa allowance when making these investments .
Diligent investors might have a "buy list" of stocks or bonds that they have been monitoring to potentially add to their portfolio at the right price. Market crashes can be an opportune time to snap up appealing assets at discounted prices.
"Investors should hunt for quality assets at attractive valuations in line with their long-term objectives. Volatility can create opportunities to buy quality assets at attractive valuations," said James Pearson, head of portfolio management at Norman K, a wealth manager.
However, with stock prices often fluctuating sharply during times of volatility, don't do all your buying at once.
Instead, spread your new investments over time to average out the price you pay. Many investment platforms offer a regular investment service that will do this automatically.
Share prices declining en masse can also serve as a useful reminder to ensure your portfolio resembles a basket of diversified assets , rather than being too heavily concentrated in one sector.
Charlie Lloyd, head of investments at Shackleton Advisers, said: "Diversification has helped mitigate some of the weakness experienced in areas of the technology market. Exposure to equal-weighted US equities, value strategies and other areas of the market has provided resilience at a time when a relatively small number of stocks have faced heightened pressure."
Indices that are relatively light on technology and AI-adjacent companies, such as London's FTSE 100, can also be worth considering as a shelter for safer investments.
What should you do with your pension?
Anyone at least a decade away from retirement should not worry too much about the current volatility. It's likely that by the time you need to draw on your pension, your returns will have had time to recover, and there will be further periods of growth and corrections in the coming years.
However, if you are concerned, it could be worthwhile speaking to your pension provider or a financial adviser about how and where your pension fund is invested.
Pension funds typically should be de-risked as you approach retirement – often referred to as "lifestyling" – when you have less time for your money to be able to recover from short-term stock market shocks. Workplace pension funds often do this automatically by reducing exposure to stocks and increasing allocations to bonds and cash.
If you have a Sipp that is separate from your workplace pension, it could be worth adopting a similar strategy.
According to Mr Coatsworth: "For younger defined-contribution savers who aren't planning to access their retirement pot for decades, the events we're witnessing shouldn't knock off course a retirement plan.
"If you are approaching retirement, the key is to review your investments to make sure they are still aligned with how you plan to take an income from your pot. Provided this is the case and you remain comfortable with the make-up of your portfolio, there should be no need to panic or fundamentally shift your approach."
What to do if you are retired
If you are already retired, the type of pension you have will affect whether or not you need to take action.
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Defined benefit pension or annuity: The good news is that if you have a defined benefit pension or annuity, you are guaranteed a set income regardless of wider market movements. So you can sit back and relax.
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Drawdown scheme: Drawdown schemes are at risk from falling prices, but a good adviser should have investment strategies ready to minimise the losses.
Jemma Slingo, a pensions and investment specialist at Fidelity International, said: "People who have already retired, and are living off their savings, might need a different approach, though. This is because of something known as 'sequencing risk'.
"When you withdraw money from your pension during a market downturn, you will have to sell more investments to generate the same amount of income. This leaves fewer investments to benefit from any subsequent recovery. This can cause lasting damage to your pension pot – particularly if you are in the early stages of retirement.
"There are a few ways to tackle this risk. Some retirees choose to live off 'natural income' – the interest and dividends yielded by their investments. Others dip into their cash reserves, while others will reduce how much income they take from their pension to reflect the tougher backdrop."
