INVESTMENT CLINIC: How should I invest a £15,000 lump sum?
Introducing Money Mail's new weekly column answering your investment and savings conundrums.
It is crucial when investing that you do your research and don’t just chase the funds with the highest returns, but pick ones that suit your needs.
If you don’t like risk and couldn’t bear to lose any money, it’s probably best to avoid emerging markets such as India and China, or commodity funds that invest in gold or oil.
But most people like the chance to grow their cash as well as getting some income from it, too.
Hot: If you don't like risk, best to avoid emerging markets such as India and China
So, an Equity Income fund is a good place to start for a sum like this. These typically pay out more than inflation and also invest in large, stable companies that have strong balance sheets and consistent earnings.
They all hold more or less the same UK-based blue chip names, such as GlaxoSmithKline and BT, which pay good dividends.
Rob Pemberton, investment director at advisers HFM Columbus, particularly likes Threadneedle UK Equity Income and Invesco Perpetual Income.
The former has grown by 49 per cent over three years, the latter by 45 per cent - though a new manager took over the fund this year. If you had put your £15,000 into Invesco five years ago, you would now have £26,460.
Another possible choice is Artemis Income, which has turned £1,000 into £1,410 in just three years and currently has a dividend yield of 3.5 per cent.
Nick Peters, portfolio manager at Fidelity Solutions, says a High Yield Bond fund is another way to get the income you need.
Safer bets: Equity Income funds hold more or less UK-based blue chip names, such as GlaxoSmithKline and BT, which pay good dividends
His preference is JP Morgan Global High Yield Bond, which invests in debt from large companies that are slightly riskier the FTSE firms.
It currently holds bonds from Italian car maker Fiat, Japanese telecoms business SoftBank and American healthcare firm HCA.
It has turned £1,000 in to £1,266 over the past three years, paying a hefty dividend of 5.45 per cent.
Higher risk: If you couldn't bear to lose money, it's probably best not to invest in emerging markets such as China
Finally, a multi-asset fund will give you access to a variety of investments including equities in various countries, bonds and property.
Mr Pemberton likes Newton Real Return, which currently has a variety of investments from UK Treasury Gilts to shares in Microsoft and Royal Dutch Shell.
It has a cautious approach so it’s never going to bring you a huge amount of growth, but it does aim to protect your cash and pay a decent income - currently around 3 per cent.
If you have an investment question email h.black@dailymail.co.uk or write to Investment Clinic, Money Mail, 2 Derry Street, London W8 5TT.
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