Saving in a bank or building society that allows you to access your money may lower risks but may not allow your money to grow to its full potential.  If you are stuck with a fixed interest rate you could lose out if rates increase or risk receiving less if your savings plan has variable interest rates. There are often penalties for withdrawing money and may result in you losing returns on your savings.

However, there are longer term saving plans such as bonds and investment with stocks and shares for those who are willing to take higher risks. Trustnet, an investment research website found the average gilt fund grew by 16 per cent but some are found to be returning less than 1% and many under 2 per cent.

The corporate bond sector which loans money to companies had an average of 4.8 per cent. In contrast, the FTSE 100 index lost 5.5 per cent of its value in 2011 which resulted in losses for many investors. Funds which were invested in good dividend prospects-the “equity income” sector showed better results with the average loss at around  2 per cent.

Nikki Hart of FinanceNews.co.uk said: "It is important to shop around before you open a savings account. Some accounts may offer high interest rates, but the terms and conditions may change. Read the small print and ensure that you are happy with the product before signing up to anything."

Funds in this sector are paying an annual income, or yield, averaging in excess of 4 per cent. Given the dismal interest rates offered by many savings accounts, some may think about turning to funds, hoping for a better return on a portion of their savings.

Nikki said: "Saving has never been so important. If you have a child and want to open a savings account, consider the Junior ISA from providers such as Family Investment, a new savings account opened in November, which is tax free. Allowing your child to recieve a lump sum when they reach 18."

Some financial advisors believe that although there are risks involved with some accounts, there may be a higher return, resulting in a more profitable investment.

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