Those planning to avail of the new Government savings scheme have two very basic initial decisions to make.

The first issue to decide is how much money to commit to the new scheme. The second is whether to opt for the security of a deposit account or go for a riskier equity-based investment.

The advice from some quarters has been to beg, borrow or steal to avail of the new scheme. While this may be a little extreme, it makes sense for most people to make every effort possible to participate in it given the additional 25 per cent the Government will contribute to the account. However, would-be savers need to bear in mind that to get the full benefit of the scheme, the money has to remain invested for the full five-year period. As a result, it's pointless putting in a large sum to start with only to find you need your money back a few months later. But those who have already accumulated savings or who are saving regularly, should definitely take advantage of the new scheme, putting aside what they can spare.

"People should restructure their other finances to be able to afford it because it's such a good deal," says Mr Jeremy Walker of fee-based financial advisers Financial Engineering Networks.

The current structure of your savings and investments will also dictate where you should put your money.

If you have several low-yielding deposit accounts, it might be time to take the plunge into the equity market. Equally, if you are still sitting on a batch of Eircom shares, it might make sense to diversify your risk by opting for a broad-based unit-linked equity fund.

How you answer a few simple questions should provide a fairly accurate guide to the level of risk you can live with in your investment decisions. Are you prepared to accept fluctuations in the value of your investment over the five-year period is perhaps the first question those planning to avail of the new scheme should ask themselves.

Those who answer no are likely to be comfortable only with a low level of risk and are probably best suited to deposit products.

Financial advisers suggest they look to the traditional savings products offered by the banks, building societies, An Post and the credit unions when they announce their offerings.

However, it is also worth keeping a close eye on the secure funds on offer from the investment firms. Eagle Star, for instance, plans to challenge the dominance of the banks and building societies in this sector with a five-year secure fund, where the price is guaranteed not to fall. Other institutions are also offering gilt and cash funds, which are safer than equity products but may deliver slightly higher returns than traditional deposits over the lifetime of the scheme. However, they are also likely to carry charges not associated with ordinary deposit accounts.

If you are prepared to live with some volatility in the value of your investment - of the order of 10 to 15 per cent, for instance - then you can probably tolerate a medium-risk equity investment product, says Mr Walker. He suggests something along the lines of a blue-chip fund, composed of the shares of leading companies, or a managed or balanced fund with a mix of shares, cash, property and bonds.

With-profit funds, which smooth out returns over the period of the investment and often come with guarantees, may also be of interest to medium-risk investors. Canada Life and Friends First are both offering with-profit options under the scheme, and others may follow.

Property funds should prove attractive to those reluctant to travel the equity route.

Meanwhile, other interesting products in this category include Ulster Bank's 50/50 fund, which is half-invested in cash deposits and half in shares.

Mr Dermot O'Brien at National Deposit Brokers is a fan of Irish Life's Wisdomscope product, a consensus equity fund that matches the average strategy of other fund managers in Dublin in deciding its asset mix and location.

He argues that it spares the investor from having to make the tough choice of which fund manager is likely to perform best over the next five years, assuring them of matching the average performance.

"You don't have to battle through comparing AIB with Bank of Ireland with EBS. You can safely go to Wisdomscope and know that you are not going to have to make that decision," he says.

The few who can accept wild swings in the value of their investment, and still enjoy a good night's sleep, can afford to opt for the more specialist high-risk options such as technology, media and telecoms stocks with their potentially high rewards.

All those who intend to go the equity route however, need to be fully aware of the risks.

Last month, consultant actuaries Becketts warned that a five-year investment period with investors saving through monthly installments might not be sufficient to generate an adequate return when charges were taken into account.

Some financial institutions are also worried that the five-year timeframe may be too short for the equity-based products.

In the brochure detailing its product offering, AIB warns that to achieve the returns typical of stock markets in the past, customers "should really consider the plan as an investment for at least seven or eight years".

Mr Quentin Teggin, marketing manager at Bank of Ireland's Lifetime, goes so far as to say that if customers are not prepared to consider a seven-year time horizon, it will advise them that its equity-based product is not for them.

To encourage customers to invest for longer, Tusa, the joint venture between Irish Permanent/TSB and Superquinn, is offering a loyalty bonus at the end of five years of 5 per cent of the total fund value, while a loyalty bonus of 2.5 per cent will be given for every five years after that.

To reduce the risks involved, financial advisers fall back on the old mantra of diversification.

People should consider investing in a mix of assets or in shares across different geographical regions. Those planning to invest the maximum amount or couples or families opening more than one account in particular could consider placing the money in more than one type of product or with more than one fund manager.

jmosullivan@irish-times.ie