When considering savings options, investors must ask themselves whether they want a short-term, medium-term or long-term investment? Income or capital growth? Capital guarantees or not (that is: am I happy to accept fluctuations in capital values)?, writes Jeremy Walker

A short-term investment would be in place for up to two or three years. Short-term investments would typically come in the form of a deposit-based account with a bank, building society or credit union.

While many investors will be looking for capital growth from their investments, some investors, in particular senior citizens, will require either an irregular or regular income stream from their money.

If the funds are to be invested for the short term, then the investor must turn to deposit-related accounts. If, however, a medium- or long-term view can be taken, then other investment vehicles such as investment bonds may well be suitable. A wide menu of pooled funds are available through which investments into equities, cash, government bonds and commercial property can be obtained.

Which funds are chosen will, however, be dependent on whether the client requires capital guarantees or not. If capital guarantees are required, investments in stock markets and also pooled commercial property investments should, in the main, be avoided.

With world stock markets experiencing exaggerated volatility at present, many investors are considering tracker bonds as an alternative method of investing in equity markets. These will be medium-term investments (three to six years) and most will offer a high level of capital guarantees. However, investors should be aware that if high-capital guarantees are provided, they are unlikely to receive all the increase in stock-market valuations. Investors must be aware that this type of product does not offer access to capital during the investment term.

However, if capital guarantees are not important and the investor is prepared to give the investment a medium- to long-term view (five years plus), then a well-managed International Equity fund, offered by either an insurer or unit trust company, would be suitable for an investment of €10,000.

These are general recommendations. Much more information on the client's requirements is needed before specific advice can be given.

Jeremy Walker is sales manager with Financial Engineering Network