The word crash has been used sparingly over the decades and is usually reserved for a fall of over 20 percent from a recent peak in a day, or over the course of a couple of days. On 19 October, 1987 - also known as Black Monday - the US stock market lost 23 percent of its value in a single day, and other stock markets had similar falls. The UK FTSE index fell 23 percent over two days – partly because it closes earlier than New York, and so it often plays catch up with whatever happens in the US the next morning.

That was most definitely a crash. In 1929, the US stock market lost over 20 percent of its value in two days - and 50 percent within three weeks. That was the famous Wall Street Crash that ushered in the great depression of the 1930s. By comparison, the US stock market has lost around 17 percent of its value from its peak in February and is now down 2 percent from where it was this time last year. Nevertheless, these are the biggest and quickest declines we have seen in world markets since they were gripped by the panic of Covid-19 in early 2020. A decline of 20 percent from a peak is considered a "bear market" - a description of a market that appears to be more likely to go down than go up. We are very close to that description right now.

While many people own stocks and shares directly, most people's exposure to stock markets come through their pension plans. There are two types – defined benefit schemes which guarantee a fixed pension income, and defined contribution where your pension pot rises and falls with financial markets.

That may sound like defined contribution plans are very vulnerable to this sell off – but not all of your contributions go into shares. Much of the money goes into safer investments such as government bonds. These tend to increase in value when stock markets fall as they are seen as a "safe haven" along with other assets such as gold. (BBC/Getty Images)