I’m 22 and have just inherited £20,000. I don’t know whether I want to put the money towards a house, or save it for the long term. How should I invest if I want to buy a house in 10 years? Or, if I want to keep the money for the distant future, how would I alter my strategy?

GP, via email

The time horizon you have available is crucial when deciding how to invest.

With a 10-year goal to buy a house, you have enough time to put your money into the stock market, but would need to start limiting the risk you are taking as the house purchase deadline approaches.

This is because if you were fully invested a month before the purchase, and the stock market crashed, you may not be able to go through with the transaction.

So you should start selling volatile holdings, such as shares or funds that invest in shares, at least one year before your planned purchase date (see below for more detail).

Ben Willis, of investment manager Whitechurch Securities, said: “If you are investing for 10 years, or investing for longer, depending on your overall attitude to risk the strategy will be pretty much the same.”