GOING IT ALONE

Many people are sufficiently confident to make their savings and investments choices without paying the fees of a financial adviser. No problem with that, but remember that you will only have yourself to blame if something goes wrong. With an IFA, you can take your complaint to the Financial Services Authority (FSA). However, you can only complain about bad advice, not bad investment performance.

INVESTMENTS RISK CATEGORIES

Low-risk
National Savings certificates and bonds

Banks and building society deposit accounts

Gilts (Government fixed-interest stocks)

Premium Bonds

Cash Individual Savings Accounts (ISAs)

Life insurance ISAs

Medium Risk

Corporate bond funds (fixed-interest-paying bonds issued by companies to raise money)

Stocks and shares ISAs

With-profit bonds – single-premium bonds sold by insurance companies

High Risk

Individual company shares

Single premium unit-linked investment bonds

Unit trusts and investment trusts, and stocks and shares ISAs, investing in high-risk sectors such as technology

ASKING YOURSELF THE RIGHT QUESTIONS

Before deciding which investments to buy, ask yourself the following questions:

Do I have any specific future financial commitments or plans?

Do I want capital growth or regular income from my savings?

What level of risk am I prepared to accept?

Do I understand how this investment works and the risks involved?

How long am I investing for? (The shorter the investment term, the fewer risks you should take.)

Is my portfolio spread through a range of different investments, sectors and geographical markets to minimise risk if one performs badly?

If choosing a higher-risk investment, is this money I can afford to lose?

Am I making the most of my tax-free allowances?

Most people automatically define themselves as a medium-risk investor. But if you would have sleepless nights if the value of your investments fell, you may be better sticking to lower-risk investments

KEY INVESTMENT PRODUCTS

ISAs. One in three savers now uses ISAs to save for retirement and one in five say they should help them retire early. Individual Savings Accounts (ISAs) were launched in April 1999, attracting some £28 billion in the first 12 months. They replaced the other tax-free investment schemes, PEPs and TESSAs.

ISAs allow you to invest up to £7,000 each year in a combination of stocks and shares, cash (£3,000 of the total) and life insurance (falling to £5,000 from April 2006). The tax benefits are the reverse of pensions; there is no tax relief on contributions but you can take your money free of most income tax and all capital gains tax.

ISAs are more flexible than pensions. You can withdraw your money whenever you wish, and spend it on whatever you like, rather than having to buy an annuity at retirement. The drawback is that you may be tempted to dip into your fund for everyday spending. Your best bet is to mix and match pensions and ISAs, giving a blend of different tax breaks and a combination of discipline and flexibility.

BUY-TO-LET. The British have long put their faith in bricks and mortar and property has undoubtedly been the best place to invest your money over the past five years.

Growing numbers have set themselves up as private landlords under the buy-to-let scheme, benefiting both from rental income and recent massive growth in property prices. Many disillusioned savers have been using property as an alternative to a traditional pension. However, now that the property market has slowed down and, some pundits say, is heading for a fall, you need to ensure you are buying at the right price.

You don't need cash to buy the property outright, but can raise the money through a mortgage (around 580,000 of those over 65 have mortgages worth £6.08 billion). Dozens of lenders now offer special buy-to-let loans, including Birmingham Midshires, Mortgage Express, Paragon Mortgages, Natwest and Woolwich.

Somebody buying a property in June 2003 for the average price of £117,902 would have seen its value rise by £19,948 and earned £9,133 in rental income in just 12 months, a total return of 25 per cent. But don't assume this kind of return will automatically continue — in addition to allowing for a market downturn, you have to account for `void periods', where your property lies empty while you wait to find new tenants.

Remember, also, that becoming a landlord is a major responsibility. You and you alone have to take charge of maintenance, repairs, damage to the property and collecting the rent each month. For that reason it suits some owners to take on the services of a managing agent who, although scooping a chunk (10-15 per cent) of your rental income, will assume the day-to-day running of the property as well as dealing with your tenants.

If a slightly uncertain market and management responsibilites don't put you off, make sure you invest for the long-term — at least five years — and find a property that will be easy to rent out, rather than one you fall in love with. Remember, you aren't buying a home, this is a business transaction that will help secure your future and even, possibly, that of your children.

TAKE NOTE

The stock market revival has faded, leaving private investors increasingly disillusioned.

Nobody knows whether equities, bonds, cash or property will perform well next, so cover your bets with a spread of all these asset classes.

The older you are, the fewer chances you can afford to take with your money.

Use all available tax breaks such as your ISA allowance.

Property has been the best performing investment for the past five years, but now seems to be running out of steam. Experts are split over whether there will be a crash.