Wednesday 29 October If you blow the lot on a spending spree or foreign jaunt, you might regret it later. Whether your windfall is an inheritance, bonus or redundancy payout, you should put it to work by investing it for the future.

One day it could be the deposit on your first home, a downpayment on a new car, or a valuable part of your pension.

How you invest the money depends on personal factors how much savings and debt you already have, and the size of your windfall. The most efficient way to use the money is to clear any expensive short-term debt, such as a credit card, store card or overdraft, says Damien Fahy, founder of personal finance site Moneytothemasses. If you have any cash left, use the money to create a pot of savings for financial emergencies, such as sickness or a shock bill, Fahy says.

Keep this in an easy access account, so you can get your hands on it in a hurry. Currently BM Savings is offering an instant access cash Isa with a rate of 1.

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Again, start by clearing expensive debts. Once you have a rainy day fund, start saving for the future. If you are likely to need the money in the next five years, say for a house deposit, avoid the stock market and stick to the safety of cash.

If you have longer, consider putting the money in the stock market. It is more risky, but potentially more rewarding. Among the tracker funds currently available with low charges are the Fidelity Index UK, which has an annual cost of 0.

You can invest in stocks and shares tax-efficiently by using your Isa allowance. There are thousands of investment funds to choose from, and your money grows free of income tax and capital gains tax. Under reforms introduced by George Osborne from next April, you will be free to spend your pension on whatever you like at retirement.

Build a thriving business and that lump sum could change your life. But be prepared for a lot of hard work. Then put the money to work. Take a close look at your personal finances, says Darius McDermott, managing director of Chelsea Financial Services.

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The stock market offers the best chance of protecting your wealth from inflation, McDermott says. Even apparently rock solid companies like Tesco are dangerous. If you have bought shares in it one year ago, you would have lost more than half your money. You can also claim valuable tax benefits by shifting some of the money into a personal pension.

You may be able to contribute even more by using unused annual pensions allowance from recent years, says Patrick Connolly, certified financial planner at Chase de Vere.

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