Personal Finance - Types of saving and investment

Question 1

Individual Savings

account (ISA)

Answer 1

A tax-free way to save or invest.

Question 2

Deposit and

savings accounts

Answer 2

An account where interest is paid on the balance.

Question 3

Premium bonds

Answer 3

A government scheme that allows individuals to save, up to a set amount, in bonds. No interest is earned
but the bond is placed into a regular draw for cash prizes.

Question 4

Bonds and gilts

Answer 4

These are fixed term securities where the individual lends money to companies and governments in
return for interest payments.

Question 5

Shares

Answer 5

Investments in business in return for equity. The shareholder becomes a part-owner of the business.

Question 6

Pensions

Answer 6

Long-term savings plans where individuals make regular contributions through their working life. This
is then repaid upon retirement, either as a lump sum or regular payments.