Where on Earth to invest?

The last three years have shown that investing in shares is a gamble that has failed to deliver. But some experts believe now could be a good time.

One argument is that they are attractively priced following a near 40% fall in the FTSE All Share index over the past three years. Of course, it could fall further, but the further it goes down, the more likely a recovery.

So provided you are prepared to hold on to your investment for the longer term, and do not expect to make steep gains overnight, shares could be a good move. The next issue is deciding which market to focus on.

UK Major Companies: Most investors feel comfortable investing in well-known names like GlaxoSmithKline, Vodafone and BP. An advantage of big companies - those listed on the FTSE 100 - is they are generally profitable companies that pay dividends and are therefore safer.

These blue chip stocks should bounce back in the early stages of a future recovery, as newly-confident investors pour money into these shares. But don't expect spectacular returns.

There are some funds dedicated to UK blue chip stocks, such as BWD UK Blue Chip Growth and DWS UK Blue Chip. But most mainstream UK funds - including index trackers - will have a large proportion of their investment in FTSE 100 shares, as this index represents some 85% of the stock market.

Vivienne Starkey, partner at the London-based IFA Equal Partners, says anyone starting to invest in equities should put all of their money in the UK.

Funds she recommends include HSBC Household Names and Fidelity Moneybuilder Growth or Fidelity Moneybuilder Income, depending on the investor's objective.

For higher risk investors, she recommends Framlington UK Select Opportunities.

UK small companies: All big companies start off small, so investing in the early stages can prove highly profitable.

Because they are considered higher risk, smaller companies will usually perform better in a rising market as appetite for risk grows, and suffer during prolonged bear periods.

If you hold a mainstream UK fund, you would already have exposure to small companies. For those wanting to spice up their portfolio, a top adviser bet is Rathbone Smaller Companies.

US: The US is the biggest economy and should not be ignored as part of a diversified portfolio, but more attractive opportunities can arguably be found elsewhere.

Ian McLeish, manager of the Scottish Investment Trust, says that despite the sharp falls in share prices, many companies can still not be regarded as cheap because their earning prospects have deteriorated.

On the positive side, low interest rates are helping to maintain consumer spending. Fidelity American is a reasonable risk mainstream fund.

Continental Europe: There are many quality companies in Europe such as Nokia and Ericsson, but the ailing German economy - the largest in the eurozone - is dimming the picture. The strength of the euro and higher oil prices, means exports will remain under pressure. But Mr McLeish says much bad news is already discounted in share prices, which are almost 50% below their peak. Ms Starkey goes for Jupiter European.

Japan: Investors have been scratching their heads about Japan for at least a decade. In its heyday, this was the world's most successful market but has tumbled by more than 75% since its December 1989 high point.

There have been plenty of false dawns. Ms Starkey, and many other advisers, say this market has disappointed too often so clients should stay clear. But others will say Japan cannot be ignored.

Global: Knowing which stock markets to follow and avoid is a tricky business. So why not let a fund manager do it for you? There are plenty of one-stop-shop funds around that invest in the UK, but also will focus on different stock markets.

A good way to invest in such funds is through the big established investment trusts such as Foreign & Colonial, Witan, Scottish Investment Trust, Scottish Mortgage and Alliance Trust.

An important advantage is these funds have ultra-low annual management charges and bargain rate purchase costs through savings schemes.

For someone holding on for 10 years, that could easily increase the value of their holding by 10 to 15% compared with a full cost unit trust with the same investment portfolio.