The financial system is going through unprecedented turmoil both in the UK and abroad. Its problems have begun to contaminate the wider UK economy with unemployment rising and more companies failing. We may have avoided financial Armageddon following the Government's intervention to shore up the UK banking sector, but the next 24 months look set to be the most challenging for the economy for at least a generation.

With interest rates, and hence savings rates, set to fall significantly - perhaps to two per cent - and inflation rates still high, it will be increasingly difficult for people with savings to avoid becoming poorer in real terms going forwards. The question of where to invest is not simple, with lower savings rates, declining property valuations and disastrous returns from hedge funds.

Where am I putting my personal money? UK equities. Why? Legendary US investor Warren Buffett has a saying: "Be fearful when others are greedy, and be greedy when others are fearful." And it is definitely the case that people are fearful - even amongst the most savvy of investors, fear is now widespread.

Investors will of course need to be cautious, avoiding over-indebted businesses and those with weak competitive positions.

There are major companies in the oil and gas, pharmaceutical and telecoms sectors, for example, that are trading on valuations which imply very little profit growth going forwards.

However, businesses such as BP, which are yielding dividends of 7.9 per cent a year, with vast cash reserves, look pretty good bets in a low-interest rate environment. These businesses may suffer short term earning adjustments but the long term prospects remain strong.

There may also be further declines before the shares rise again and it is almost impossible to call the bottom of the market. However, we are probably not far away.

In short, bad news is an investor's best friend. Buying at the top of the market when everything looks rosy is a sure-fire way to lose money.

Philip Shapiro is a Managing Partner of Synova Capital, a UK private equity fund chaired by Poju Zabludowicz