Saving & Investing Money - Chapter 14 Flashcards
What are savings?
Savings can be defined as the part of our income we choose not to spend.
What is investing?
Investing is putting money aside in order to make more money at a later date.
Explain 3 reasons why you should save money.
- For future planned spendings e.g. holiday
- For emergencies
- For major family events e.g. a family wedding.
Where can you save your money?
- Commercial Banks e.g AIB - Banks offer Savings (Deposit) Accounts to their customers. Savings (Deposit) Accounts - similar to a current account but it is not used for day-to-day use.
There are three main type of Saving Accounts: a) Demand Deposit Account b) Term Deposit Account c) Notice Deposit Account. Interest is earned but DIRT will be paid. - A Post - Offers a range of saving products to customers. Savings are state-guaranteed meaning the government will repay any money lost if something happened to An Post. Interest will be earned, in some cases DIRT does not have to be paid.
- Credit Union - A credit union is owned by members who save together and lend to each other. Your shares in the credit union are your savings - the more savings you have the more shares you own. Good interest rates are available but DIRT must be paid.
- Building Societies: e.g EBS - A building society pays interest on savings and lends money to customers for buying or upgrading property. Most people would use a Building Society to get a mortgage to buy a house.
Learn how to calculate simple and compound interest.
On slides on teams.
Learn how to calculate DIRT
What is DIRT (Deposit Interest Retention Tax)?
DIRT is a tax paid on interest earned on savings.
What does liquidity mean?
Liquidity means how quickly we can get access to and get our money back when we want to.
What does interest mean?
Interest is extra money you receive on top of the money you have saved in a financial institution
What does risk mean?
Risk refers to the how safe and secure our money is in the place we decide to save or invest it in.
What does credit rating mean?
Credit Rating refers to how likely a person is to repay a loan.
Name and explain 4 factors to consider when saving or investing.
- Risk - Will your savings be safe and secure?
- Liquidity - How easy is it to take out or access your money when you need it?
- Taxation - Will you have to pay tax on the interest you earn on your savings (DIRT)?
- Terms and Conditions - Are there any fees on your account?
What is dividend?
Dividend is money you earn on your shares. It is paid at the end of the year.
