Taking a step up the risk ladder means assessing your appetite for risk

It has been a torrid time for cash savers over the past five years. The Bank of England Base Rate has been on hold at its 300-year low of 0.5% since March 2009. Although there have been murmurings of a possible rise in interest rates on the horizon, savers should still explore all the options available to generate a return from their savings.


In a period of low interest rates and persistent inflation, people are beginning to realise that the purchasing power of their savings is being eroded, yet they are struggling to identify better ways to balance their short-term and long-term financial priorities.

This might mean taking a step up the risk ladder, but before venturing away from cash deposits, you need to assess your appetite for risk. Can you afford to tie your money up for a length of time, or will you need to be able to get your hands on it without delay? What is your ability or capacity to take risk? How much risk are you willing to take?


History suggests that returns from shares outstrip the returns from other assets, including cash, over the long term. Although past performance is not necessarily a guide to the future, investing in shares is an option for those who can withstand (both emotionally and financially) the ups and downs of stock markets.

You can invest in funds such as a unit trust, an OEIC (pronounced ‘oik’) or an investment trust. These funds invest in a number of shares and are managed by specialist fund managers.

There are blue-chip funds, tracker funds and mid-cap funds – and that’s only the beginning. All have different aims and performance can vary considerably from one type to another. Some will be aggressively managed, investing in a small, concentrated portfolio of stocks, while others may invest in recovery stocks – companies that have fallen out of favour with investors.

Remember the old saying ‘speculate to accumulate’? That’s very true of investing in shares, but you can position your investment at a level that you’re comfortable with. We can help you to review your options – generally the more you want to get back, the higher the risk to your original investment.


Bond funds remain popular with more cautious investors looking for a better level of income than cash, and these range from the security of government-backed Gilts through to more speculative and higher yielding corporate bonds. Bonds are investments representing the debt of a government, company or other organisation.

Effectively they are loans, or ‘IOUs’ issued by these organisations and bought by banks, insurance companies, fund managers and private investors. The decision on which bond fund to choose can be a tricky one: different types of bonds perform differently depending on the economic conditions.


Commercial property was badly tarnished by the property crash during the credit crunch – it left many investors who had turned to the asset class for the first time nursing substantial losses.

Historically, commercial property has had a place in a portfolio for income investors. Its long-term track record is strong, while it offers diversification from shares.

Investments into property funds may have restrictions on how often or how easily you can withdraw your money due to the nature of the underlying assets. An investment made directly into property may be difficult to sell and its value is a matter of opinion rather than fact.


Gold has long been viewed as a safe haven against volatile stock markets and inflation, as well as a hedge against a weak US dollar. In the current economic climate, gold continues to have merit as a store of wealth. Gold as an investment has grown in popularity in recent years, partly because of the risks posed to our modern global financial and economic systems.

There are a number of ways to invest in gold, be it via a unit trust or an exchange-traded fund or actually owning the gold itself in the form of bullion or coins. Gold is not without its risks though, and its value can fall.