Savings and Investments Flashcards
what is a ISA? (individual savings account)
a savings account where the holder is not charged income tax on the interest received
ISA advantage
tax free up to £25,000
safe and secure
ISA disadvantage
interest rates can change
fraud and being hacked
what is a deposit saving account?
interest is paid on the balance and normally the holder needs to give notice before withdrawing funds
deposit saving account advantage
earn interest
easy to open and access
deposit saving account disadvantage
minimum balance required
low interest compared to other accounts
what is premium bonds?
government scheme that allows people to buy bonds and every month you have a chance to win a cash prize
premium bonds advantage
can win up to £1 million
only need £25 to set up
premium bonds disadvantage
very slim chance of winning
win money over a long period of time
What are bonds and gilts?
fixed term agreements where the lender lends money to companies and government in return for the interest payments and the money is invested for a period of time
bonds and gilts advantages
all tax free
investments from £5,000
bonds and gilts disadvantages
can take 5 years to get good money back
have to put loads down to get loads back
what are shares?
shares involved investments in a business in return for equity (money). The shareholder becomes part of the business and they want dividends (payouts) from the companies profit
shares advantages
can win a lot
increase capital which can be re-invested
what are pensions?
long term savings account so you can have it when you retire. This can be done in lump sums or regular payments in your working life
