Hey guys, it's sasha. Whenever you're going to see advertising for an investing platform, you will notice there's a lot of words in there about how safe your money is and how well it's protected. Your money is held in a separate bank account that the company can't access without your express authorization. Your shares are held with a huge third party in your name, and your assets are predicted for up to 85 000 pounds by the financial services compensation scheme in the uk or whatever the relevant authority is in the country where you are based.

Now i'm not going to go through these things as they are because we all know them. We all know that these protections exist and we've been told them enough times, but there are actual big risks to your money that these specific protections, in my opinion, don't really help with or don't cover that. I really wanted to talk about because these are real and i wanted to cover how safe money actually is with investing apps. I'm not going to be talking about any specific app in this video.

I'm not going to be specifically talking about any of them at all. Before anyone goes and makes comments or allegations, this is something that probably applies to the vast majority of them to some degree uh. I think you'll probably agree. If you go and watch this and before we get into the details, i am not a financial advisor.

I can't provide financial advice to you and if you do need financial advice, please make sure that you go and seek the help of a suitably qualified professional. Now, let's get started by talking about fss protection, but not in the way that maybe you would expect now. Fscs protection is good. It is a way that people's money can get protected by the uk government for up to eighty five thousand pounds.

If the worst thing that happens in the company goes bust and then the payouts are reasonably fast fast. So if the company goes bust, these guys will typically get it to you within 14 days and in some cases even faster than that. However, when is an investing company likely to go bust? When does this thing kind of normally happen in time, and at which point, might you need to the help of fscs and the answer is in a lot of cases? There are other examples of in a lot of cases it's during the period of a massive financial crisis. Let's say: markets go haywire and for whatever reason, your favorite investing platform platforms just goes and collapses and goes offline and you can't access your money and you have to resort to using fscs.

Now, in a few days, when the dust settles, then the fscs will go and come in and then they'll be able to go and actually get hold of funds, because it's not immediate. It's not it's not instantaneous and then they'll get hold of the assets that the company holds in cash or in various different shares and then they'll be able to go and distribute it to their customers. But remember at this point: if the company is going under we're in the middle of a huge financial crisis, so any time that is greater than a few minutes, maybe not even that long is too long by the time we're able to go into the process of Actually liquidating the holdings, the value of these may be much much lower. You, unfortunately, have no control in this situation as to what you're, holding the soul for whatever that liquidation process gets at the point when it happens, maybe several days later, is what you'll be able to to get in terms of your stock prices, and even if your Stock prices have lost 90 or more in that time frame.

You're just gon na get that money back at that price after everything has already happened. So is your money actually protected by fscs? Well, i guess, from my personal unprofessional opinion the answers it depends now, even if things don't go that far, let's say that you wake up on the next black monday, black friday or black any other day when the stock market decides to collapse, because you know stock Markets do collapse from time to time. It is a natural order of things is something that happens every single cycle and we're sort of almost overdue one. Some people would maybe argue, and they do happen irregularly.

Nobody knows when they happen, it might happen on monday. They might happen in one month, they might happen in six months. It might happen in five years, nobody knows and that that is where we are, but when it does happen, when people are walking out of big established businesses that have been around for 200 years with cardboard boxes, what is going to happen? Will you be able to sell your shares at that point in time before they go and collapse in value to near to zero, like what happened last time, with some banking shares, for example, or will there be a technical glitch with a third party that you know Just happens to coincide exactly with the particular day when markets go particularly ballistic, or will there be too many transactions that are, you know breaking the capacity of this really nice free platform that you're using or will the events completely unrelated to this crash going to prevent Anyone from being able to go and buy or maybe sell, specific stocks, because you know that sounds really crazy, but only three weeks ago we were prevented from buying certain stocks, although we could sell them so who knows uh we live in a precedent times. What? If we're in a situation where you could buy but not sell, specific stocks, as they were crashing, sounds completely implausible right anyway, in the event where a share in a company can collapse as much as say 90, like i mentioned, or more isn't, when you're really protected.

If you are unable to stop it from collapsing in any way whatsoever and you're forced to sit there watching from the sidelines as the value of your entire investing portfolio gets completely wiped out without being able to do anything at all about it. We've seen that a relatively small number of issues about three weeks ago that are relatively minor in comparison to an entire market crash, can put an incredible amount of strain on these platforms. And so it looks like maybe they aren't as geared up for major events or big one-off occurrences, as they would lead you to believe at that point. Some ran out of capital, they literally said so.

This is official public information, some couldn't process transactions and they said that much as well. There was a huge amount of mixed messaging people couldn't log into their accounts, and some arbitrary decisions meant that on some particular stocks that somebody else decided you couldn't go and make particular types of transactions. So if say the next time around, it is tesla stock or something else that you have a lot of money in, and somebody just arbitrarily decides that you can't go and sell that stock because of unprecedented circumstances. How protected is your money in that case? So here's an important lesson for anyone who maybe hasn't been through one of these crashes before maybe you were too young, maybe you weren't investing at that point in time.

Investing is a massively risky business and, despite all the protections you get told about every single time, you see one of these adverts. Despite all the certainty that is built up around these platforms, there is a reason when why, every time you go and sign up for these platforms, the terms conditions say your capital is at risk because it is a crash is coming. When will it happen? Nobody knows but will when the crash happen, will you be able to do much about it? Will you be able to affect anything? The answer is probably not the email support you're getting from your app where you get a reply. A few days later may suddenly not quite sound so good when you just lost a load of money with the app and sure i am a long term investor and i will probably be asleep.

Maybe when this happens, or maybe i'll not be at my desk, maybe i'll not be near a computer. Maybe i won't be able to log into my app, but i don't really care too much, because i invest for the long term over years, i'm interested in companies where i think the valuation is severely undervalued, where i think they're going to be going massively further than They currently are so i'll i'll take a dip when it happens and i'm going to be weathering the storm. I'm going to be waiting for that dip to then normalize and i'm okay with that. But a lot of people maybe have different strategies, and maybe some people are invested in companies that are likely to maybe be slightly more exposed to a general market crash than maybe some others.

I don't know - maybe i am as well, but next time you hear people. Happily telling you that your money is protected and it is safe, just know that maybe doesn't quite mean what it says, take care out there guys. Thank you very much for watching. I really really appreciate it and i'll see you guys later.

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