Where should you put your nest egg? Obviously you want the best returns you can from your cash, but how much of a risk can you afford to take? That's the question Independent reader Adam Johnson asked.
"I have around £20,000 to invest and I want to look at mid-risk, mid-term investment options," the Londoner wrote. "I'm thinking of sticking the money in a managed fund, which begs the question, which fund? Any help you could give me would be invaluable."
There's no simple answer, of course. All of us want to get the best possible returns from investments but you will only know which funds have performed best in hindsight. Without a crystal ball that will tell you what the future brings, you have to take a bit of a punt.
Two factors to consider when choosing where to invest are time and risk. In short, how long do you want to invest and how much risk will you take? Adam says he's "mid-term, mid-risk". So we put his question to a number of financial experts. "Assuming he already has some low-risk deposit funds, then I would consider a multi-asset fund, which gives a good spread across a variety of investment types," suggests Alistair Cunningham of Wingate Financial Planning.
"Mid-risk and mid-term would tend to suggest to me no more than 50 per cent in stocks and shares with the remainder in less volatile assets, such as corporate bonds, and commercial property. In a lower growth, but still risk-on environment the only true certainty is cost – therefore a multi-asset passive offers market exposure at the lowest possible cost," he says.
The funds he suggests for Adam? "Standard Life Investments MyFolio Market II, Architas MA Passive Moderate, and CF 7IM Moderately Cautious.However, be careful as there are a lot of very similar sounding funds that have different objectives," Alistair warns.
Sally Greenwood, wealth manager at Pilling & Co, says: "Adam's question suggests he desires equity exposure with a propensity to favour the UK. Two investments with different styles and mandates would complement each other."
She highlights the J O Hambro UK Equity Income fund and Fidelity Special Values. "The Hambro fund seeks an attractive level of dividend income coupled with the potential for long-term capital appreciation. Fidelity Special Values invests mainly in companies listed on the London Stock Exchange."
Brian Dennehy of FundExpert.co.uk says: "As a relative novice Adam might simply want to invest into a very small number of funds, perhaps even just one fund which will have a mix of things into which they invest. Even if he's quite experienced, he may be content to invest into one or two outstanding funds with a wide spread of types of underlying assets.
"These sorts of funds fall within different sectors. The most popular is probably the 'Mixed Investment 20-60% Shares'. Such funds contain between 20-60 per cent in equities. In this category Jupiter Merlin Income and Standard Life Inv Dynamic Distribution are outstanding, based on consistent long-term performance."
When it comes to buying the funds you can use an expert -who will charge a fee for their advice - or do it yourself and buy investments through an online fund supermarket. Another option is Nutmeg.com, a new low-cost online service which builds a portfolio of investments for you based on the level of risk you are willing to take and how long you want to invest for.
Irrespective of the fund, ensure you use your tax-free allowance in an individual savings account. You can stash £11,520 in an equity Isa in the 2013-14 tax year and a further £11,880 in 2014-15 and pay no tax on the proceeds. Adam could shelter his £20,000 from tax by putting half in before 5 April with the rest afterwards.