Talk about being stuck between a rock and a hard mountain. Savers today are enjoying the paltry returns of c2.8% for instant access savings and 3% for a one year fixed bond.(1) That's the rock.

Over their shoulder is the rugged mountain of inflation squashing any potential returns they may have. Inflation currently sits at 3.5%, meaning that a basic rate tax payer will be 'enjoying' 2.24% whilst inflation corrodes the real value of their capital at a rate of knots.(2) In fact, if this continued, and a saver took no income at all, £10,000 would become £8809 in ten years. A saver who took the paltry income of 2.24% would have capital implosion as their capital would fall to £7002 over the same period.

Indeed this is no surprise as history repeats itself. If I take the period of 22 years from May 1987 (pre the big crash) up to May last year, inflation would have impacted your capital by 80% yet the benchmark comparison of the Halifax liquid gold account would have returned just 108% giving the saver just 28% (or 1.27% per year) to spend.(3) Those caught most, are typically those who don't have readily available independent investment advice. These are the same customers who may be subjected to with profit bonds or protected/structured products on the 'whim' that they may exceed this inflation whilst apparently taking no risk.

I have given enough reasons why investors should be wary of 99.9% of these structured products, if not stay clear of completely, and I will cover with profits again next week.

But what are the solutions that an investor/saver can look for? Let's remember March last year was indeed Armageddon and any person considering anything involving anything investment related may have been considered mad. Indeed that was a sign for most that the bottom of the market existed.

But we dont really need to be market timers like that to make the best returns. Equities (stocks and shares) are a well known hedge (protection) against inflation. In a very basic example, if you think about it, energy prices cause inflation, so energy companies must be making lots of money, so it follows their share price would rise, thereby giving the investor and saver protection against inflation.

Over the same period mentioned above for example (and not including the large rise in the market in the last year) the FTSE allshare would have returned the investor a staggering 366% which is 286% over and above inflation or 13% per year.(3) I chose this period of time because it began just before the stock market's infamous black Wednesday and includes four more catastrophic loss periods.

Subsequently the capital, in pursuit of this gain would have fluctuated wildly. Not every investor has the same appetite for fluctuation in their capital, nor might they be receiving the same investment advice, independent of the commission an adviser might be receiving.

If, however, an investor was truly informed of what the potential for return over inflation versus the potential for fluctuation really meant, they may well have a different outlook.

Let's remember the old adage that when the wind blows hard you can build a wall or a windmill. If equities were flat and rose like a building society, there would be no opportunity to buy cheap and sell high. Equities don't, and this momentum caused by greed and fear creates immense opportunities that investors take advantage of.

Unlike 'without' profit bonds - a product which was poorly contrived by the insurance providers and sold by 'financial advisers' who didn't understand them at destructive commission levels of 7-8% - there are methods of limiting risk in your investments whilst creating the potential for upside return.

Many of these are found in the cautious return sector such as Henderson multi manager income and growth, and Jupiter Merlin income. These funds aim to reduce and manage risk but enjoyed 24.8% and 21.4% over the last year. (4) For a list of the better performing lower risk funds call Peter on 0845 230 9876, e-mail info@wwfp.net Source: 1. Which 2. Bank of England 3. Lipper 4.Trustnet