Anyone lucky enough to have a lump sum of cash to invest this year will be forgiven for wondering where to put it. Should it be safely stored under the mattress? Too risky you may get robbed and as organic matter your cash doesn’t stand still, the longer it sits under the mattress the more it erodes over time as its value decreases.

How about gold? Should you join those who are rushing to seek the comfort and safety of the precious metal?

There is also the high risk and potentially high rewards that stocks and shares offer. Depending on the lump sum, the property could also be considered as a place to see an investment mature nicely.

After all, you can’t go wrong with property, it always goes up in value and is just as safe as houses, right? This used to be the case, but now many real estate markets globally appear to be imploding, while the risk of exposure to the credit crunch in emerging places like India and Brazil is unclear.

Apart from property, everywhere you look, there are advocates for all forms of investment. Those with vested interests will inevitably spread misleading interpretations of the direction in which a market is headed, creating positive or negative sentiment. This creates uncertainty, which inevitably leads to the kind of panic that we are now seeing among investors. We are led to believe that house prices are crashing, that gold has never been a safer bet, and that it would be financial suicide to invest in stocks and shares as we enter one of the stormiest global markets seen in more than a year. quarter of a century.

Gold soared in 1980 only to collapse in a bear market that lasted until 2001. House prices plummeted in the early 1990s recession, plunging hapless mortgage holders into negative net worth. The stock market took a huge hit from the dotcom bubble in 2000, resulting in ruin for many. Stock markets, gold, and property have rallied, hitting all-time highs in the process.

The latest global financial panic caused by the credit crisis, accompanied by apocalyptic talk of another Great Depression, has now seeped into mainstream thinking.

If all of this leaves you wondering where to invest your money while all this panic is going on, it pays to keep a cool head. Capitalism is characterized by cycles of boom and bust, which act as a vital safety valve for market economies. What goes up must inevitably come down at some point. Falling house prices are blamed for the current malaise in the banking sector, but surely no one in their right mind believed that house prices would rise indefinitely. House prices in the UK and US are at their least sustainable levels since 1989. In the UK, a correction was both inevitable and late, with the house price-to-income ratio at its highest point.

Experts in the field are now warning us that it is a bad idea to invest money in a market that is not likely to recover in the next few years. The credit crisis is supposed to aggravate the situation causing a drop of up to 30% in the UK property market.

But as Corporal Jones of Dad’s Army would say, “Don’t panic!” A real estate correction is still unlikely to last more than four years and historically property is an asset that has consistently outperformed gold over the long term. People will always need a place to live (rent or buy) and the demand for housing has not disappeared.

The investment should generally be viewed as a long-term commitment of at least ten years, and naturally you should expect some peaks and valleys along the way. Of course, there is always the problem of predicting when the market will bottom out, the best time to invest, something that even experts find difficult to predict.

The key to finding the best real estate investments is gaining access to good local knowledge that will help secure genuine deals at prices below market value. So, with ownership requiring specialized knowledge and stuffing money under the mattress out of the question, let’s take a look at the case of gold.

In the long term, gold is a real asset like property, but with the added bonus of being liquid. Sure, it costs you money to store it, but it’s always marketable at the same time. Also taking into account the current economic malaise, food and oil prices have risen to record highs, fueling inflationary pressures on governments around the world. Some predict that oil will soon hit $200 a barrel that was previously unthinkable. There is also the suggestion among doomsayers that confidence in fiat paper money may be unraveling.

As well as providing the essential raw material for jewelry, the mere mention of gold causes a great deal of excitement among gold enthusiasts. They religiously track your progress through complex charts that interpret your peaks and troughs by day, hour, week, or month for evidence to support your opinion that gold is where you should invest your money.

At first glance, they have a strong argument.

Governments around the world are frantically trying to stimulate growth in their economies by lowering base rates, the resulting currency devaluation and inflation make the conditions perfect for gold to rise. Gold is an inflation hedge that provides some stability in an unstable global market. As any defender of the yellow metal will tell you, when all else fails, gold always has value, as history has shown.

Where once the main topic of dinner conversation was property, people are increasingly talking about gold. Gold is the new property. If you bought gold for $600 an ounce in January 2007, it would now be worth between $800 and $900. A good return where you look at it, something for sure…

So is there any drawback?

Once again, this depends on whether you see gold in the short or long term. In the short term, the price of gold is volatile, after hitting a record high of $1,000 a troy ounce in March, it is now hovering around $850. This is hardly a drop, but it shows how the market is driven by speculative investment when times are bad for the economy. When savings roared throughout ownership and stocks were the hot place to put your cash, then what happens when the good times return? Can we trust all those investors to sit tight while the big returns are being made elsewhere?

The point is that gold is good for the risk-averse, but it would be a mistake to invest all your cash in it because it is little more than a store of value. Gold cannot be exploited and does not produce returns.

So if we ignore other commodities and label them ‘handle with care’, this leaves us with stocks and funds. Investors familiar with the stock market will tell you that over the long term, stocks outperform all other asset classes. Buying the right stocks can mean big profits depending on how profitable a company is going to be in the future, however, like anything that depends on future performance, this too can be a risky strategy. You can also go for funds, but avoid choosing a fund just because it has done spectacularly well in the past. Any decision to invest in funds should be carefully considered, ask anyone who has invested their money in some real estate funds recently, an area that is having its toughest time in 20 years.

Before you even consider where to invest your cash, there’s one question you need to ask yourself: how much risk am I willing to take? Depending on your risk appetite, you may want to consider any or all of the options listed above. There is no easy answer and even the experts get it wrong, so the sensible strategy is to spread the risk. Develop a broad portfolio that contains an element of gold. A broad portfolio will greatly increase your chances of weathering the financial storm.

The alternative? Invest your money in a high-interest savings account and wait out the storm, but beware, base interest rates are falling and this will reduce your returns. And you may also be wondering: are banks a safer bet than under your mattress these days anyway?