MANY private investors are facing a dilemma. They have seen the UK stock market rising strongly over the past three years and don't want to miss out on further gains, but they are nervous about a possible market crash.

So what should they do now - continue investing and hope for the best, or wait and see? Or is this the time to consider a ''protected'' or ''guaranteed'' stock market fund which seems to offer the best of both worlds?

Leaving your money in the bank is not a particularly attractive option at present interest rates. It also means you will lose out if the stock market continues to rise. Some pension fund managers in the City of London who moved money out of shares a year or more ago because they feared a correction have missed gains

of up to 30%.

On the other hand, no-one likes throwing money away, and if there is a sharp fall in share prices you could see your investments lose 20% or 30% of their value in just a few days.

Hence the growing interest among investors in products which allow them to participate in rises in the stock market without exposing them to the losses.

The concept behind all these products is similar. However, as Charles Levett-Scrivener, of independent financial adviser Towry Law, points out: ''The technicalities of each one are slightly different, and trying to understand which is going to provide the best value for money is not easy even for professional advisers.''

A case in point is Barclays' ''advanced savings account'' to be launched next week, which incorporates stock market protection, but at an apparently high price.

Broadly speaking, there are two main categories of protected or guaranteed equity products - bonds and unit trusts/Peps. There are added complications such

as the fact that some are based offshore, and some quote returns net of tax and others don't. You should always check on the tax position when you are making comparisons.

It was guaranteed equity bonds which first gained popularity. They are still sold by insurance companies, building societies and banks, such as Nationwide Life, the Britannia building society

and the TSB.

These are normally issued in limited amounts and run for fixed periods of five to six years. On maturity they typically pay a return linked to the growth in the FTSE-100 index over the period. The gain may be fixed, or it could be a proportion of the rise in the index up to a specified maximum amount.

If the index falls, the original investment is returned, although some bonds guarantee a certain basic return on top of this figure. The minimum investment is

usually #1000 or more. Making withdrawals before the end

of the bond term is not normally permitted.

A variation on the guaranteed bond theme is offered by Scottish Life International. It has recently been heavily promoting its Offshore Deposit Bonus Fund, which pays a quarterly bonus when

neither the FTSE-100 nor F&P 500 index falls over a quarter.

If either does go down, your capital won't fall by more than your chosen level of protection, which can vary between 95% and 100%. The level of bonus you receive is determined at the beginning of each quarter.

Although you can withdraw money from the bond at any time, there will be extra deductions if you cash in within five years. Gains on offshore bonds can currently roll up free of tax, but there may be a bill to pay when you eventually cash in if you are a UK resident.

To be sure of keeping your gains tax free, and have greater flexibility, you could invest in a stock market protected unit trust through a Pep. These are offered by a growing number of companies including AIB Govett, Edinburgh Fund Managers and Scottish Widows.

The way they normally work is that most of the fund is invested in FTSE-100 shares, while the remainder is used to buy financial derivatives. These enable the managers to set a minimum price at various intervals, below which the fund will not fall.

At AIB Govett, for example, this exercise is carried out on a quarterly basis, while Scottish Widows sets its ''safety price'' for at least 12 months at a time.

The actual price of the trusts will fluctuate, but you can be sure at AIB Govett that you will get at least the minimum if you cash in at a quarterly review. At Scottish Widows, the safety price applies at all times, unless the actual price is higher, of course.

When prices are reset there is a maximum reduction if the market has fallen. At AIB Govett it is 2% per quarter, while at Scottish Widows it is 5%. However, so far at Scottish Widows the price has been increased on all three occasions that it has been reset since it was launched two years ago, and it now stands 21.5% higher than at inception.

The disadvantage of investing in these funds is that you do not get as much growth as you would from an ordinary unit trust because of the cost of providing the protection.

Kevin Simes of Scottish Widows explains: ''Calculations show that over the long-term in normal market conditions the average drag on performance is 1.5% per year, but because of the exceptionally good conditions recently, the fund is lagging

further behind.''

Another Pep option, on offer from Legal & General, is its Dublin-based Growth & Protection Pep which will track a combination of the British, German, French and Swiss stock market indices over a period of six-and-a-quarter years.

At maturity it will provide a return equal to the growth in these indices, plus a bonus of 40% of that growth. If the markets fall, your capital is protected. You can cash in your investment earlier, but then the amount you get back is not guaranteed.

This arrangement, which qualifies as both a single company and a general Pep, could be especially attractive to those who want to

use up their single company allowance this year. Even investors who are willing to take a risk on a spread of shares in current market conditions may find investing #3000 in one share off putting. This scheme provides a way around that.