Saving And Investing

Question 1

Investment

Answer 1

• Investing is putting money aside in order to make more money at a later date.

Question 2

Liquidity

Answer 2

Liquidity: means how quickly we can get access to and get our money back when we want to.

Question 3

DIRT

Answer 3

DIRT (Deposit Interest Retention Tax): Tax that must be paid by an individual on interest earned in a savings account.

Question 4

Factors to consider when saving or investing

Answer 4

1. Risk - Will your savings be safe and secure?
2. Reward - Will your savings earn interest? (Interest is extra money you receive from the financial institution for saving your money)
3. Liquidity - How easy is it to take out or access your money when you need it?
4. Taxation - Will you have to pay tax on the interest you earn on your savings (DIRT)?
5. Ease of Access - is it easy to make regular lodgements and withdrawals from your account?
6. Terms and Conditions - Are there any fees on your account?

Question 5

Where to save

Answer 5

Commercial banks e.g AIB

An Post

Credit Unions

Question 6

Formula for calculating simple interest

Answer 6

PrincipalxRatexTime

Question 7

Simple interest

Answer 7

Interest that you earn by investing a sum of money

Question 8

Compound interest

Answer 8

• Compound interest is when interest is added to the savings and that added interest also earns interest from then on.