Are bonds a good bet?

I have a £100,000 inheritance to invest. I've been looking at the National Savings & Investments Guaranteed Equity Bond. Due to the relatively low level of the FTSE this seems a remarkably sound investment. Do you agree?

I'm prepared to tolerate some risk for the possibility of a higher return, but don't want anything that's too high risk.

Colin Richardson, Sunderland

To use a well worn phrase, you need to go back to basics.

What is your age? What are your priorities, financial and otherwise?

Do you have debts that should be repaid? Is your pension funding adequate? If you don't need income now, might you need it later?

Have you a big enough "emergency fund"?

For now I will assume that you will tolerate low risk but not higher - suggesting that you would like the opportunity for returns greater than those available in a building society, but without day to day exposure to the ups and downs of the stockmarket, and you would also want your capital secure.

The National Savings (NS) Guaranteed Equity Bond has a five year fixed term with a guarantee of your capital back, and growth being 65% of the return on the FTSE 100 index over this term.

These are undoubtedly attractive types of contracts with markets being so uncertain.

I would only recommend such products where the invested capital is guaranteed or protected at the end of the term, and there are a number.

Another product from General Electric (GE), which was very similar to the NS product, gave an 80% exposure to the FTSE 100 index - check to see whether new products are coming from GE and other providers.

Bristol & West, for example, has offered products that currently provide a 70% exposure, but linked to four different indices (UK, US, Swiss, Japan), with a 90% exposure over seven years.

NDF/Abbey National offer a minimum 22% return, with the possibility of up to 44% depending on FTSE performance.

So there are a range of these types of products coming and going on a regular basis. You forego the benefit of (low) low interest rates, but have the potential for something greater without putting your capital at risk.

Brian Dennehy, Dennehy Weller & Co

The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.