Q As an avid follower of the money markets, I am becoming increasingly concerned about the level of interest rates for savers with bank and building societies. I have been relying on the income my deposit account provides for 12 months now, but I am conscious that I am eating away my capital. Can you offer any solutions?

A Chancellor Gordon, Brown admitted in his Budget earlier this year that the outlook for interest rates was far from, rosy. With high street savings rates currently, averaging 4.1 percent net of basic rate tax (Source: Moneyfacts July 1998) you are right to be dissatisfied with returns, particularly if you are trying to keep your capital intact.

There are several vehicles in which you could invest that would provide you with a level of income. The choice of which depends largely on your attitude to risk, and how much you wish to invest. Building society accounts are considered low risk but lower returns reflect this, and, as you say, the effects of inflation can erode your capital. PEPs offering regular income are another option but you can only invest up to £9,000, and you should also remember that contributions to PEPS will no longer, be allowed after next April, although the Individual Savings Account (ISA) Will then be available.

As far as Bonds are concerned, With Profit Bonds, where money is invested for around five years, have typical returns of 7.9 percent net per annum, which can often be taken as regular income.

For more information on current investment options call 01484 860123

Q I like to think I am environmentally friendly and tend to only deal with companies that follow ethical policies, I am keen to mirror this in my choice of investments but wondered how popular are ethical investments and would I be sacrificing performance?

A A 1997 survey by the, Ethical Investment Research Service (Eids), showed that over £2 billion is invested in 'green' unit and investment trusts with companies such as Sun Life and Standard Life jumping on the ethical investment bandwagon. In addition, support from the government is also making a strong case for ethical pensions and investments, so you could safely say that ethical funds are on the up.

In terms of performance it, is early days for many of these funds, but some of the larger players have performed relatively well compared with other investment sectors.

For a table of Ethical Unit Trust performance readers can call 01484 860123

Converted for the new archive on 30 June 2000. Some images and formatting may have been lost in the conversion.