2.4 Long-Term Savings Products Flashcards
Are easy access savings accounts intended for short term or long term?
Short term
Easy access savings accounts pay a lower rate of interest. Why?
Because the money is instantly available
If someone wants to put money aside for a fixed period, which type of account would give them a higher interest rate without them taking a lot of risk?
Fixed-term savings account.
Many providers call these ‘bonds’
What maturity periods are usually available for fixed-term savings accounts?
6 months - 5 years
Is the interest rate on fixed-term savings accounts normally fixed for the period?
Yes
Do fixed-term savings accounts allow withdrawals? Does withdrawing cause an interest penalty?
Some do not allow withdrawals.
Others do but impost an interest penalty.
Is a fixed-term savings account best for saving in the short term, medium term, or long term?
Medium term
What does NS&I stand for?
National Savings and Investments
What does NS&I offer?
A small range of savings accounts, that are mostly short term.
(It used to offer a number of bonds and long term savings products but not any more)
Give an example of a long term savings account currently offered by NS&I
NS&I Children’s Bonds
Who can buy a NS&I Children’s Bond?
They can be bought for a child under 16 by a parent, legal guardian, grandparent or great-grandparent
What is the interest offered by NS&I Children’s Bond
The interest rate is fixed for a set term, depending on when the bonds were purchased.
What is the minimum and maximum investment in a NS&I Children’s Bond?
Min = £25 Max = £3,000 per child per issue
Who is a Children’s Bond suitable for?
Someone who wants to make a long-term, tax-free investment for their child’s future and who wants to lock in the interest rate at the start.
Are NS&I products seen as being less or more risky than those offered by other providers? Why?
Less risky because they are 100% backed by the UK government
