It's all back to risk and return. The greater the risk the greater the potential return and potential losses. One of the most basic economic rules.

There are many different types of investment available to you and details such as your tax band, residency status for income tax purposes, whether you are married and your age are all factors which will determine the best tax wrapper (product) to use for your personal circumstances.

Generally, I would look to maximise my ISA allowance, and put the rest into an ISA for the wife. They are simple to get (ISAs not wives) and are almost tax free and you can also get your hands on the money as and when you like. You can simply elect to use some UK equity income funds and take the dividends from the plan (the capital value will also fluctuate depending on the performance of the stock market).

There are also some funds available that are generating between 10-11% returns that effectively act as a factoring service to solicitors. Fairly low risk, but I would only use this for a small (10-25% portion of any income portfolio).

Diversification of the asset allocation is the key to reduce volatility and risk. This does not mean to simply but 5 UK equity funds as they will all invest in Vodafone, BP etc and you could end up with funds that are very similar to each other.

Ask yourself if you need the additional income or whether you would just find it useful. The more you rely on it the less risk you should look to take with it and use cash ISAs and fixed interest or bond/gilt funds within a stocks and shares ISA.

Don't forget that inflation is running at over 5% so any return lower than this is effectively losing you money, but at least you will know that it is only going to be around 1.5-2% in a cash ISA, whereas you could lose up to 40% in stocks and shares.

I would think that you could get professional advice from an IFA, who would get paid via commission, and could sort you out with a portfolio to meet your needs.

Hope you find this helpful.

MriannaDesttiny:It's great. I want to learn more about investing.....

Indeed. Good luck. It's best to practice with pretend money before risking the real stuff. In general, to get a good return you have to take a risk. If you invest in a high street savings account, the risk is very low and the return is, maybe, 3 or 4%. Anything with the chance of a return greater than that come with risk.

To me, peer to peer lending would be helping a friend or relative buy a house or start up in business. Many see it as using Zopa and the like. There's a useful article here

http://www.telegraph.co.uk/finance/personalfinance/savings/8214836/Peer-to-peer-lending-how-to-choose-the-right-site.html

As you say though, it's best to spread your money around.

Lostjester:Kinda getting off topic here guys, can we focus on advice instead of MCGTimber?

That's sensible. I tend to get quite angry about such people. Their first post has now been deleted.

The third paragraph of my first reply is worth looking at. You can invest in most legitimate investments through an ISA (up to the annual limits) and this would be sensible if you are a taxpayer.

Timber High Return Investments:

if you based in the UK, or London you always can contact us to arrange a meeting and if you suspicious about company registration and FSA registration company has all required by law documents.

The last time I looked, London was in the UK. So what are the company and FSA registration numbers? Where is the web site? Why be so secretive about who you are?

You do have an insurance policy with Euler Hermes Plc. Are they underwriting your "guaranteed 24% per annum return" for investors or just covering your company for certain losses?

I believe that you are something to do with MCGtimber.co.uk. That web site is selling timber, not investments, and there is neither a company name nor any registration details there.

Your points would be clearer if they were made by someone in your office who speaks English.

LostJester, an investment touted on message boards like the previous post (it'll probably be deleted by moderators in a day or two) will see the value of your savings fall in value faster than you could shout "timber".

A 24% return in a year is achievable but only if you take risks. Any investment offering a "guaranteed 24% per annum return" is a scam.

It's worth spending a few pounds on established financial magazines from your newsagent and looking at some of the returns available behind the "money" tab at the top. A safe, cash-based investment might earn you 4% each year or £50 per month. If you want more, you will have to take risks. Some smaller and overseas banks will pay 4.5% or more. An "income" investment trust or unit trust might pay out 5% per year in dividends but it would come with the possibility of your capital inceasing or decreasing (and that can be by 24% in a year, up or down).

There is nothing wrong with doing a little research and investing part of your savings in something timber-related but you should certainly not hand all your savings over to anyone who posts on internet message boards or to anyone you meet in a pub.

One useful creteria for doing anything involving money over the internet is not to deal through any web sites that do not state a full name, address and telephone number together with registration numbers for Companies House and the FSA (if applicable) then, if things go wrong, at least you will know exactly whom you have been dealing with. The MCGoffice.co.uk web site falls someway short of this critera. The whole website appears to contain just three letters and a couple of tree shapes. Maybe they'll have some money to spend on a proper website when those 24% gains come rolling in.