New to investments

Quite simply because she's not happy to risk any of her money; that's her personal attitude. She has no job at the moment, so she is living off the inheritance she has been given.

From what you say she is risking the money then. Living off the inheritance puts her at shortfall risk and inflation risk. For income there is no "no risk" option. If she draws all the interest/income on £100k then in 10 years time that £100k will be worth around £65k in real terms. Thats a real terms loss of £35k. In 20 years it will be worth around £42k in real terms.

Taking some investment risk with some of the money doesnt mean she has to go gung ho right up the risk scale. It may be just dipping the toes in the water with some of the money and staying down the lower risk end. Risk is not on/off. its a sliding scale.

Its a perfectly logical consideration on her part when being asked to put money into something that you dont necessarily understand. I was the same when I started but with a lot of experience down the line know more about specific areas.

Part of the problem is the way the mainstream press treat stories about the stock market. Its always "£50 billion wiped off share prices" which gives one view of risk rather than Mrs Smith from Devon invested £100 per month and now has £50,000 in her portfolio rather than the £10,000 she would have had in the bank.

These numbers are made up but you get the idea of how the media run the dramatic stories not the ones about the successful long term investors.

Absolutely! An ex-colleague of mine regularly talks me through his investment products, and it's only by chatting to him that I've come to some understanding of how it all works. He lost some shares in Northern Rock when it crashed a few years ago, but that loss was nothing compared to how well he's done with other funds!

Remember back to 2008 in September when the markets dropped heavily and quickly (as they normally do in a stockmarket crash) and the news had tracker on screen and making big deals of how much was being lost. it was big new coverage. Yet did you know in 2009 you had one of the biggest growth years on record on the stockmarket. When it goes down it gets lots of coverage. When it goes up it gets far less.

Other things to look out for is emphasis. When something goes down and its bad that its gone down then they use words like "plummet".

Or, they try to make the figure sound bigger than it is. That was common with respossessions data last year where they used percentage increases rather than actual figures. That was because the actual figures were coming off low amounts and despite the recesssion, the repossession figures were low and lower than the last recession. Yet when expressed in percentage terms as an increase, they sounded higher.

And last, a favorite is "since records began". There were frequent times when bad data was referred to as the worst since records began. However, a number of times, the records only started in the mid 90s after the last recession. So, the records up to that point had only had growth years and no recession. So by default the recession data this time would be the worst since records began.

You would think this is the first financial crisis there has been. However, there have been 8 since 1956. They average once every 7 years. The problem this time is that there was a longer gap between them and more of a bubble to burst. So, nearly a whole generation had not experienced a recession. Plus, we had 24 hour news that loves to feed on the negative.