For those who trusted the banks enough to take their savings out from under the mattress, the deposit account provided an easy and safe way of managing a lump sum.

The rate of return was not spectacular compared with more risky and high-profile investments but the capital was guaranteed, accessible and there were no costs involved in opening an account.

However, creeping inflation and current low deposit rates mean that holding cash is becoming increasingly risky. Historically low interest rates allied with a projected inflation rate of 3.0-3.5 per cent mean that many depositors could see their capital eroding as it sits in the bank.

If borrowers have adjusted with alacrity to the low rates, depositors too must face up to the new climate. Financial consultants increasingly advise alternative investments because cash is no longer a risk-free option. "The most dangerous place to have your money at the moment may be on deposit," one investment banker says.

Depositors need to consider a number of factors when seeking alternatives to the traditional savings account. Most crucial is whether they require an income from their savings or if they are in a position to opt for capital growth, which provides a better return.

They also need to assess the amount of risk they are prepared to take, the length of time for which they are prepared to invest, the tax that will be levied on any gains and whether they are seeking gains that are guaranteed.

Investors who require a regular income from their lump sum such as pensioners are in a particularly difficult situation, financial advisers say.

"Those needing an income are stuck between a rock and a hard place," says Ms Dervilla Whelan, tax partner at O'Hare & Associates. "What they might do is decide how much they need to live on for a few years and leave that on deposit and invest the rest."

Mr David McCarthy, of Galway-based financial consultants McCarthy & Associates, says there is an urgent need for the deposit-taking institutions to tackle this issue and come up with a suitable product.

"There is an opportunity there for someone creative to come up with a good product for an enormous market," he says.

Financial advisers also say clients need to be prepared to invest for the medium to long term to make a decent return. Those who panic and take their money out early or are forced to do so can end up losing money.

"Those who make money in the market are those who can afford to stay in," one accountant noted.

Depending on their exact needs, there are a number of options depositors can explore in pursuit of better returns.

Those who are getting little or no interest from on-demand deposit or short-term deposit accounts can consider longer-term savings plans of two years-plus if they do not want any risk.

EBS Building Society offers rates which are among the most competitive in the market. Its two-year savings product pays 10 per cent before tax and its five-year product pays 30 per cent.

The building society also offers a managed fund option for those prepared to invest for more than five years. Its balanced fund, which invests 40 per cent in cash and government bonds and 60 per cent in equities, yielded a return of 23 per cent after tax last year. Its growth fund, which is 32 per cent cash and bonds and 68 per cent equities, returned nearly 31 per cent. Investors face no entry or exit charges but there is an annual 1 per cent administration fee.

A distribution bond is another alternative that may suit those who need an income from their savings.

New Ireland offers an income-focused distribution bond which invests about 20 per cent in cash, some 40 per cent in high-yielding blue chip stocks and the balance in government bonds.

Investors receive dividend income from the investment twice a year, on April 1st and October 1st. The bond, which was launched in October 1994, paid a first dividend of 2.5p per unit but this has since increased to 3.0p per unit.

Those saving for the short term to meet a particular bill or cost could do worse than invest in Prize Bonds, some say. In addition to the chance of winning a prize, they are liquid and can be cashed in when the money is needed.

For those prepared to invest for the longer haul and for capital growth, many financial advisers are recommending Special Portfolio Investment Accounts (SPIAs), which are invested in the Irish stock market and boast a very low tax rate of 10 per cent.

Investors can put up to £75,000 into such an account, although 10 per cent of the sum must be invested in stocks with a market capitalisation of less than £100 million. Investors have an option of putting a further £10,000 in companies listed on the Developing Companies Market (DCM). Davy Stockbrokers offers three SPIA templates a balanced portfolio which is a mix of Irish equities and government bonds; an income portfolio which is made up of high-yielding Irish equities and bonds; and a growth portfolio which is invested entirely in equities.

A similar option for risk-averse clients are the special investment products offered by insurance companies. These operate in the same fashion as a SPIA account except they are unit trusts and the risk is spread more widely over a bigger number of companies.

Bank of Ireland Asset Management offers a product called Eiri which is invested in the same fashion as a SPIA. There are two funds to choose from, a traditional balanced fund with up to 55 per cent invested in Irish equities and the balance in bonds or an equity fund with up to 55 per cent invested in the Irish market and the balance in international equities.

Benefiting from the strong rise in the Irish equity market last year, the balanced fund yielded a net return of 40.41 per cent and the equity fund returned 46.96 per cent.

Tracker bonds, which have proved popular in recent years, have become a less attractive option in a low interest-rate environment as the cost of providing the underlying guarantee gets higher and higher.

"I would not recommend any of the tracker bonds currently available on the market," says Mr Trevor Cullen, director at BCP Stockbrokers.

Instead, Mr Cullen is advising clients, particularly those who require an income and a secure return but are willing to invest for the medium term, to look at withprofits bonds. These work by enabling the investor to gain a return from the growth of the assets purchased while also making a return from profits made by the institution.

Mr Cullen points out that a number of institutions are offering carrots to entice investors, including returns of up to 10 per cent tax paid for the first 12 months.

Such products tend not to pay out as well as other investments in good times but pay better when the going gets tough. BCP cites one institution which has never paid less than 6 per cent or more than 11 per cent.

Mr Cullen also recommends selected commercial property funds which offer the security that goes with bricks and mortar. With rents shooting up and strong demand from overseas computer firms and British retailers, property funds have produced returns of about 14 to 15 per cent tax paid over the last three years while the rate of return over the last year has been closer to 18 per cent.

A novel investment idea for those with money to put away for a nine-year period is Christmas trees.

Royal Irish Silvaculture is running an investment scheme to plant 100 acres of Noble Fir Christmas trees in Co Carlow. It is seeking to raise a total of £400,000 to be invested for a nine-year period with a projected return of 13.4 per cent per annum tax free.