Savings And Interest Money Flashcards
What are savings
Savings can be defined as the part of our income we choose not to spend.
-It is money set aside with the plan to spend it at some point in the future.
• Also called ‘deferred spending’.
What is investing
i i p m a i o t m m a a L t
Investing is putting money aside in order to make more money at a later date.
What does liquidity mean
H Q w c g a t a g o m b w w w t
Liquidity: means how quickly we can get access to and get our money back when we want to.
What does risk mean
H s a s o m i i t p w d t s o i i i
Risk: refers to the how safe and secure our money is in the place we decide to save or invest it in.
What does interest mean
E m y r o t o t m y h s i a f i
Interest: is extra money you receive on top of the money you have saved in a financial institution.
What does DIRT mean
Deposit interest retention tax is a Tax that must be paid by an individual on interest earned in a savings account.
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 does credit rating mean
A c r i a s a b o y p p h
A credit rating is a score assigned based on your past payment history
Factors to consider when investing or saving
R
R
L
T
E o a
T a c
- Risk - Will your savings be safe and secure?
- Reward - Will your savings earn interest? (Interest is extra money you receive from the financial institution for saving your money)
- 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)? - Ease of Access - is it easy to make regular lodgements and withdrawals from your account?
- Terms and Conditions - Are there any fees on your account?
Commercial banks WHERE TO SAVE
- Commercial Banks e.g AIB, Bank of Ireland
• 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. You save money for a rainy day.
• 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.
An post WHERE TO SAVE
• 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 unions WHERE TO SAVE
• A credit union is owned by members who save together (by buying shares in the organisation) 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.
What is dividend
T i m y e o y s. i i p a t e o t y
this is money you earn on your shares. It is paid at the end of the year.
Building societies WHERE TO SAVE
• 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.
What is AER
T a e r s y t r i y w h g o s a t e o t y
The annual equivalent rate shows you the real interest you will have gained on savings at the end of the year.
