I have a number of savings accounts with different banks totalling about £200,000. I know I shouldn’t have more than £85,000 per bank so have spread the total around, but I’m getting really low interest. I should probably think about investments instead but I’m nervous about the risk of losing my money. What should I do?

Jeremy Woodruff of Smith & Pinching responds:

It is true that all forms of investment will normally involve a degree of risk, but it is possible to build a portfolio with a managed level of risk. The important thing is to understand investment risk and to keep your portfolio within your comfort zone. The answer is usually to spread the risk, using a diverse mix of savings and investments that delivers some security alongside the potential for growth.

With inflation currently so high on the one hand and interest rates rising on the other, it’s more important than ever to consider what the ideal mix of savings and investments might be to get potential inflation-beating returns.

When I talk to clients about managing their wealth, I start by finding out what it is they want to achieve with it. Is it a better lifestyle now, a secure retirement, or an inheritance for the children, for example? Analysing your needs and your desires is critical to determining what your investment strategy should be. Your needs are the essentials: your savings and investments must deliver on those first – and they have to be achievable as a first priority. After that, we can track a route to reach your goals.

It is possible – and often desirable – to change the level of investment risk you take at different stages in your life. In younger years, higher risk may be suitable to deliver a greater chance of growth while later, as you approach retirement, you may simply want to lock in the gains you have made.

The key to all of this is a good financial plan that takes everything – your needs, goals and attitude to investment risk – into account. Once your plan is in place, you can monitor its progress and adjust it as necessary to keep it on track.

I strongly recommend that you take independent financial advice from a Chartered Financial Planner to put a plan together that is right for you. Your future wealth and security may depend upon it!

Any opinions expressed in this article do not constitute advice. The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

For more information, please visit www.smith-pinching.co.uk