After 14 consecutive interest rate rises and soaring mortgage rates, inflation is finally falling. It dropped to 4.6% in the year to October.

Although this is good news for our food shopping (it won’t get any cheaper, but we should see fewer price increases), we’re unfortunately not out of the woods just yet. The Bank of England warns that it’s unlikely to cut interest rates any time soon.

For those in a position to save, there’s more good news. According to the Office for Budget Responsibility (OBR), the benefit of better savings returns outweighs the impact of higher mortgage rates.

At the time of writing, it’s possible to get up to 5.22% on easy access savings and up to 5.91% on fixed rates. If you’ve been feeling uninspired by slow investment returns in the last few years and you’re worried about the impact that the cost of living could have on your wellbeing or lifestyle, you might be tempted to sell your stocks and keep your money in the bank instead.

But is this a good idea? Here are just a few things to consider before you do anything drastic.

Keeping cool in a crisis

Investing is as much of a psychological challenge as it is a financial one. When you can’t turn on the news or scroll social media without someone saying that the economy’s in tatters, it can be hard to make rational decisions — especially when it comes to matters that affect our livelihood.

If you can get a greater or similar return on your savings than you’ve been getting on your investments, cutting your losses and selling your stocks might seem like a no-brainer.

You might even breathe a sigh of relief once you see the money reach your account. Unfortunately, these feelings of security can be short lived. If you’ve sold your investments for less than you paid for them, you might experience feelings of guilt. If the market recovers in the coming months or years, you might be hit with a heavy dose of regret too.

It’s easier said than done, but keeping cool in a crisis is essential for your long-term financial wellbeing. By leaving your stocks alone, you can reduce the emotional burden too.

Time in the market

The Bank of England has made it clear that today’s interest rates are unlikely to be lowered any time soon, but that doesn’t mean they’ll be around forever.

If we do eventually see a return of the rock bottom interest rates we experienced following the 2008 financial crisis, you’ll probably run back into the arms of the stock market. Unfortunately, stocks will be more expensive by then, costing you far more than they would if you purchased them today.

Not to mention that in the run up to Christmas, the stock market tends to go up by around 1% to 2%. So if you sell your investments now, you might be feeling regretful in a month’s time.

Remember that timing the market is unlikely to lead to long-term wealth. Time in the market, however, is a tried and tested investment strategy responsible for creating some of the world’s richest people. Meanwhile, as this graph shows, missing the stock market’s best days can dramatically undermine your returns.

Planning for life’s biggest events

In the same way that we’d advise clients against keeping more than they need in savings, we’d also advise against keeping everything in stocks.

You’ll need at least 3-6 months of expenses in cash for emergencies. If this doesn’t sound like enough, talk to us about insurance and protection. With the right cover, you can protect yourself from the financial fallout of redundancy, illness and injury, without hoarding more cash than necessary.

We’d also recommend setting money aside for any big life events that might occur in the next 3-5 years. So if you’re planning a 2-week cruise, your daughter wants to go to university in the next few years, or your son has recently become engaged, make sure you’ve got the cash to hand, long before the event.

That way, you won’t need to dip into your investment portfolio or undermine your returns.

Protecting you from financial uncertainty

When faced with financial and economic uncertainty, it’s human nature to go into panic mode. You might sell your investments, turn down upcoming social events and start changing supermarkets in a bid to make savings.

We often get calls from panic-stricken clients convinced that the sky is falling. By the end of the call, we’ve usually managed to calm them down and put things into perspective.

After all, protecting them from financial uncertainty is part and parcel of the financial plan we created for them in the beginning. We’ve built diversified portfolios designed to weather any storm. We’ve recommended insurance products to cover lost earnings. We’ve already had conversations about where to keep their cash.

Our clients are already protected from a number of financial possibilities and crises. The only thing left to do is avoid the 24-hour news cycle and take bad news with a pinch of salt.

Inflation can rise, interest rates might follow, and stock markets go down as often as they go up.

But, in the words of Peter Lynch: “The key to making money in stocks is to not get scared out of them.”