Topic 2 - Attitudes Towards Financial Planning Flashcards
What is a deposit?
An investment of money into a bank or building society. It’s considered to be a safe investment as your money doesn’t decrease in value and is protected by financial regulations.
What is a Gilt/Corporate bond?
The money an individual lends to the government or large companies. The loans are set for between 5 and 30 years and repay a set rate of interest top of the loan amount. There is a small risk of them defaulting on the payment.
What is property?
It is seen as a relatively safe investment, as it is uncommon for house prices to decrease in value. Most people are unable to invest all the capital into a house, so may invest through a ‘collective property fund’, where investment funds are pooled together.
What is a UK share?
A portion of a company tat someone can buy, which are used to raise money for the business. These shares can be sold to other investors for either a profit or loss depending on how the company has performed since the date the person purchased them. If the company makes the profit, it will sometimes pass the profit onto the shareholders in the form of ‘dividends’. Shares are traded on the stock market, which is a regulated platform where shares are issued, valued and sold. The risk factor of shares varies greatly depending on the size and success of the company.
Give an example of a ‘Deposit’?
Creating a savings account at Barclays and storing money there.
Give an example of a Gilt/Corporate bond.
You lend the government or a buisiness money to pay for a debt but put an interest rate on it, so you make profit when they repay the loan.
Give an example of a ‘Property’.
Your house.
Give an example of a UK Share.
Company shares up for sale on the stock market.
What is ‘Childhood’?
You have no financial responsibilities, and have everything you need paid for by your parents. 0-12.
What is a ‘teenager’?
Emphasis on spending, likely to receive an allowance or get a part time job to earn extra money. 13-18.
What is ‘Young Adulthood’?
Either in lower paid work or studying at higher level (Uni), building foundations for the future. 19-30.
What is ‘Mature Adulthood’?
Earning more money, and saving money to pay for children, a house, future needs, ect. 31-40.
What is ‘Middle Age’?
Earning the most income, children less dependant, little debt left, and saving more for retirement. 51-59.
What is ‘Old Age’?
Retiring, spending their saved money, taking holidays, arranging their will for their children, Death :(. 60+.
