Savings and Investment

Question 1

ISA

Answer 1

holder is not charged income tax on the interest received

tax is not charged on interest earned allowing saver to keep rewards but notice is often required to make withdrawals

Question 2

Deposit and savings account

Answer 2

these are accounts where interest is paid on the balance and normally the holder needs to give notice before taking out withdrawals
interest is earned on positive balances but is then taxed

Question 3

premium bonds

Answer 3

a government scheme that allows individuals to save up a set amount by buying bonds
can be easily withdrawn but amount invested loses value due to inflation

Question 4

shares

Answer 4

shares involve investment in a business in return for equity
prices fluctuate offering a potential high reward but no guarantee

Question 5

bonds and gifts

Answer 5

fixed securities where the lender lends money to companies and governments in return for interest payments.
regular fixed returns but risk of loss if the bond value falls

Question 6

pensions

Answer 6

long term savings plan where individuals make regular payments throughout their life.
encourages individuals to save bu outcome is hard to predict