Blue-chip

What is it? Like a slice of Laura Ashley or Thomas Cook? These major companies are known as “blue-chip” because they are solid and reliable, make up the FTSE 100 index (100 biggest UK companies on the stock market) and pay large and regular dividends to shareholders. FTSE 100 shares are different from a tracker fund as you can choose to buy individual shares in 10 or 20 companies that you really like, rather than opt for the whole package. You can buy individual shares through a broker like TD Waterhouse and do research online at Trustnet (trustnet.com).

How much could you make? On average these make 5% to 10% a year, meaning a £9,000 yearly investment would make roughly between £450 and £900.

What’s the risk? High risk, as share prices can fall as well as rise. These are best seen as medium-term investments, of around five years.

What to invest in: £750 or more per month