Diffrent Types Of Investments Flashcards
What is an ISA
Individual savings account allows you to save money tax free
Advantages of ISA
Higher rates of interest paid
No tax paid on dividend income
Long term savings
Disadvantages of ISA
Investment risks
Interest rates
Fixed terms
What is a savings account
Bank account meant for saving
What are the advantages of having a savings account
Safety( safe to store money since it is insured by government)
Liquidity( Easy to access money)
Financial discipline
What are the disadvantages of savings account
Withdrawal limits( There could be limits to withdrawals made each month)
Fees( could be charged with maintenance fees)
Low interest rates( interest rate can be lower than other investment options
What are gilts and bonds
A loan that is given over a fixed period of time in return for a fixed rate of interest
What is a pension
A saving scheme you can take out when you retire
Give a fact about pensions
It is a law that all employees should have access to workplace pensions
They pay a Percentage of their wage into scheme
When you reach 55 you can cash out the money
Give advantages of pensions
Steady income
Long term savings
Protection from creditors( pension funds are kept safe from creditors in bankruptcy situations)
Give disadvantages of pensions
Access restrictions( can only take out money once you’ve reached a certain age)
Pensions are linked to the performance of the stock market
Tax is payable on income from pensions
