Last autumn, when stock markets were nosediving and some pundits were predicting a catastrophic end to the unprecedented bull run, many nervous savers and investors did not know where to turn. The deposit route was all but closed to them as interest rates continued to plunge and there was a considerable act of faith required if they were to move their cash into riskier bonds or equity funds. So far, at least, the worst predictions have been wrong and if anything, European financial markets appear to be holding their own in light of the euphoria surrounding the introduction of the euro. There may yet be more uncertainty in financial markets, whether because of the situation in Russia, Japan, the Middle East or due to President Clinton's Senate trial.

However, there is no denying the air of optimism about investing in the burgeoning European financial markets which are undergoing a period of unprecedented expansion, privatisation and development and should certainly benefit short-term investors, say many financial advisers and stockbrokers. We asked two of our regular contributors - John Crowe, director of the personal financial services division of KPMG and Douglas Farrell of broker NDB, to recommend where a Family Money reader with a £30,000 (#38,100) windfall should invest his/her money this year. Our fictitious reader is a person with a medium-level risk profile who will not need access to their funds for at least five years. John Crowe said: "I'd suggest that they split their investment in two. I'd put £20,000 into a good with-profits bond, ideally with Equitable Life. Not only is it a very low-cost bond but the returns have also been so good in recent years. There's been a lot written about whether the Equitable will have to go public because of the annuity guarantees it made to pension-holders back in the 1970s, but I expect all the mutual insurers will end up as public companies eventually anyway. If you have a with-profits bond with the Equitable, you would end up with free shares if they went public, so that's another plus. "With the other £10,000 I'd recommend a euro-denominated blue chip equity fund, say, with Fidelity. There are no guarantees, but you're not taking a huge risk either. If you can take a five-year view, what you will be getting into is probably the biggest equity market in the world and participation in a reserve currency. This is huge developing market. In Germany, for instance, there are thousands of family-owned companies that are looking at the US market experience as a reference point. It's going to be quite amazing. "Even though profits from these funds are taxed at a CGT rate of 40 per cent, because they are gross roll-up funds - tax-exempt, with profits rolling over into the next year untouched - you would pretty much break even after five years, compared to Irish funds which are taxed internally every year."

Douglas Farrell said: "We have a lot of clients looking for alternatives to deposit accounts these days and I would tell your Family Money reader the same thing: you have got to reassess your attitude towards risk. In a deposit account you may be earning 3 1/2 per cent before tax and under 3 per cent after tax. But when inflation is taken into account you are getting a return of about a half of 1 per cent on your funds. Anyone who is taking a regular income is actually losing money at this stage. "I know that many people with deposit funds are afraid of stocks and shares so we are tending to recommend products with guarantees or that carry lower risks.

I'd split the £30,000 into the new CGU Life Guaranteed Bond because it does carry a guarantee on the fifth anniversary and there are no upfront charges, and it is 60 per cent invested in Irish equities. There are early encashment penalties though. "Another option would be the Ulster Bank ISEQ tracker which carries a 90 per cent capital guarantee and is 100 per cent invested in Irish equities. The downside is that it costs 6 per cent to buy in and they keep the dividend stream, but most people accept these days that if a product comes with a guarantee there's going to be a price to pay. "A good rule of thumb is that you should assume a return from a guaranteed product that will be 70 per cent of what you could expect from one with no guarantee. The idea is not to be greedy, but to be comfortable with the risk profile."