MONDAY was meant to be the most depressing day of the year. It certainly was for the London stock exchange!

The FTSE 100 share slumped to 323.5 points, recording the market's sixth biggest one-day fall ever, wiping £77 billion off the stock market's value.

Worries about a US recession and low turnover from US traders celebrating the Martin Luther King public holiday exacerbated the falls. Fingers pointed at contracts for difference (CFDs) - which account for a fifth of London stock market turnover.

Ane the falls showed no signs of abating yesterday with the FTSE again tumbling three percent in early trading.

At the close of a CFD contract, the price paid for the shares is the difference between the opening and closing prices, multiplied by the number of underlying shares specified in the contract.

A popular alternative to speculating on share price movement CFDs are traded on margin so investors maximise trading capital - paying no stamp duty and saving 0.5 per cent compared to traditional share purchases.

Monday's only stand-out rise came from Northern Rock - up more than 46 per cent at the close in reaction to the government's proposal to turn £25 billion of loans into state-backed bonds.

Whilst the stock market reacted warmly to this the Liberal Democrats shadow chancellor Vince Cable believes it to be a bad move - the government nationalising the Rock's debt but privatising its profit.

So is the stock market still an attractive proposition? And what should investors do with their cash now?

Barclays head of community relations for the south west, Julia Husband offered some advice: "Knowing your objectives when investing is an essential starting point, this will determine your appetite for risk.

"For example if you keep all your life savings in safe investments such as savings accounts you'll face virtually no investment risk and have peace of mind, but your return will be lower and inflation could eat away at the deposit's value.

"If you're thinking about investing in the stock market as a general rule you shouldn't invest for less than five years and you must remember that the value of shares can fall.

"If you're unsure about what or where to invest you should consult your financial adviser."

Media relations manager for Nationwide Building Society Steve Cowdry added: "Building societies, especially Nationwide, continue to benefit from savers transferring deposits from Northern Rock.

People are concerned about the fall in the stock market and want to put aside money ahead of an economic slowdown.

They're looking for a safe haven' for their money and Nationwide provides just that. For example, those who want to save regularly can earn up to 6.5 per cent (gross per annum), whilst our fixed rate bonds offer up to 6.05 per cent (gross per annum).

"Nationwide is the second largest savings provider in the UK and its high net receipts are a result of its product range that consistently offers good long-term value."

And what's the outlook for the stock market? Communications director of Bournemouth based LV Nigel Snell said: "Historically, investment markets have encountered periods of turbulence on their long-term upward path, and we agree that market volatility is likely to continue in the coming months.

Nonetheless, our outlook for 2008 remains positive.

For those consumers holding long-term investment products - and assuming their financial circumstances and goals haven't changed - we don't see the current period of volatility as a cause for undue concern."