Elderly investors should be particularly wary of promises of high returns or income, according to the Irish Financial Services Regulatory Authority (Ifsra).

Many investment products are only suitable if the money remains invested over long periods of time, Ifsra points out.

Equity markets historically rise in value over long periods of time of a decade or more, but on a year-to-year basis, they can be subject to ups and downs.

This volatility makes short-term investment in equities unwise, especially for elderly or retired investors, who may not have the earning power to recover from losses.

Elderly investors may need money for an emergency and thus should avoid investing all their funds in products with inflexible maturity dates.

Assuming that an elderly investor already has adequate income, for example from a pension, a lump sum of €20,000 to €30,000 should be invested in a cash deposit account to provide a good emergency fund, says Ian Mitchell of Deloitte Pensions & Investments.

If elderly investors are tight for income to live off, it might be wise to consider a cash-based income bond, Mitchell adds.

Lump sum investment products sometimes offer an income facility, whereby investors can instruct the company to pay out a portion of the bond's proceeds at regular intervals.

"You should be aware that these payments are not 'income' from your investment, rather part of your unit holding is being encashed on a regular basis," Ifsra notes in its guide to savings and investments.

"If the fund investment growth less charges does not keep pace or exceed the amount you are taking as income, you will be eating into your capital."

Consumers should expect to receive investment advice based on their profile, which includes their financial history; their appetite for risk; their family circumstances; their employment record, and their age.

But financial services providers sometimes fail to give properly-tailored advice. In a recent case, two sisters, aged 82 and 79 at the time, were awarded €42,500 in compensation by the Ombudsman for Credit Institutions, who said that an unnamed bank had failed in its duty of care by recommending an unsuitable investment.

The bank advised the sisters to place their entire savings in a "balanced income portfolio" for three years. The amount of their capital to be paid back would depend on the performance of the Eurostoxx 50 Index. In other words, it was a risky, sophisticated equity-based investment.

During the terms of the investments, no withdrawals could be made, cutting the sisters off from access to their capital. And when the investments matured, the sisters had lost €52,000 from their capital sum.

In his 2004 annual report, the Ombudsman stated that given the sisters' age, it should have been obvious to a professional banker that some provision giving them access to their capital for emergencies was required.

It should also have been clear that the sisters' chances of recovering any losses would be limited because their working lives were well past.

This chain of events began when the sisters asked their bank how they might get a better return on their life savings, which up to then had been kept in a term deposit account.

With interest rates on deposits rarely creeping past 3 per cent, it can be frustrating for lump sum investors of all ages to watch much of their return eroded by inflation.

"Interest rates are low at the moment for cash-based investments," says Mitchell. "But for older investors, this is not as significant as the need to ringfence their overall security."