Saving And Investing Flashcards
What is saving?
Savings can be defined as the part of our income we choose not to spend. It is the money set aside with the plan to spend it some time in the future. Also called deferred spending.
What is investing? Give an Example.
Investing is putting money aside in order to make more money at a later date. It is like saving but you receive some sort of reward for investing money. Examples: investing money in a company (buying shares), buying a house.
What is Liquidity?
Means how quickly we can get access to and get back our money when we want to.
What is Risk?
Refers to how safe and secure our money is in the place we decide to save or invest it in.
What is interest? In relation to saving and in relation to borrowing.
Interest is the price of money. It is the extra money you receive on top of the money you save in a financial institution. It is also the extra money you must pay on a loan from a financial institution.
What is DIRT?
Deposit Interest Retention Tax, Tax that must be paid on interest earned in a savings account.
List five reasons for saving.
- For future planned spending e.g. a holiday
- For emergencies
- For major family events e.g. a family wedding
- For retirement (when you stop working)
- To improve your credit rating
What factors should you consider before saving or investing? Name 6 and explain each.
Risk-will your savings be safe and secure
Reward-will your savings earn interest
Liquidity-How easy will it be to access your money
Taxation-DIRT-Tax on interest earned
Ease of Access-Regular lodgements and withdrawals
Terms and conditions-are there any hidden charges
Name and give examples of four financial institutions in which you can save?
Commercial Banks-AIB, Bank of Ireland
Credit Unions-Donabate Progressive Credit Union
Post Office-An Post
Building Societies-ESB
List the services provided by and the disadvantages of commercial banks. List the three types of Deposit Account.
Offer savings (deposit) accounts similar to a current account but not used for DAY TO DAY use. (Rainy day fund)
There are three main types of deposit account:
Demand Deposit Account
Term Deposit Account
Notice Deposit Account
A disadvantage of commercial banks in that though you do earn interest DIRT will be paid.
What services are offered by post offices. What are advantages of saving in a post office?
Offers a range of saving products to customers
Advantages:
1. Savings are state-guaranteed meaning the government will repay any money lost if anything happens to An Post.
2. Interest will be earned and in some cases DIRT does not have to be paid.
Who owns a credit union? How does this work (who owns the shares)? Name two advantages of Credit Unions and one disadvantage.
A credit union is owned by its members who save together (by buying shares in the organisation) and lend to each other.
Your shares in the credit union are your saving-the more savings you have the more shares you own.
Good interest rates are available but DIRT must be paid.
Dividends instead of Interest this is money you earn on your shares as interest. It is paid at the end of the year.
List the services provided by building societies. What do most people use building societies for?
A building society pays interest on savings and lends money to customers for buying or upgrading property.
Most people use building societies to get a mortgage
What is Interest in terms of saving only?
Interest is a reward for saving money in a financial institution.
What are the two ways to calculate interest?
Simple Interest
Compound Interest
