Topic 5: Understand the various choices available for storing money

Question 1

List 2 risky places of storing your money.

Answer 1

• hiding money in your house

- keeping money in a purse, wallet or coat pocket.

Question 2

Where is the best and safest place to store your money?

Answer 2

With a bank or building society.

Question 3

What 9 must you consider before you can make an informed choice of where to store your money?

Answer 3

• what access do you want to the savings
• how much can you save
• when you might need the money that you have saved
• how much risk you are willing to take with your money
• the interest rate
• other incentives
• information
• ethics
• culture and religion

Question 4

Where can you save the most amount of money?

Answer 4

In a bank or building society.

Question 5

What is a regular savings account?

Answer 5

If you are able to save something from your income every month, you can make a standing order from your bank account to pay a stated amount into your savings account. This type of called is called a regular savings account.

Question 6

If you need to withdraw money quickly, what type of account should you use?

Answer 6

You should choose a flexible account that gives you “instant access” to withdrawing money whenever you want it without giving the bank any notice.

Question 7

What might happen to your money if a bank were to go bust?

Answer 7

In the UK, the government guarantees all deposits in banks up to £85,000.

Question 8

What must all interest rates be quoted as?

Answer 8

All interest rates must be quoted as an AER.

Question 9

What does AER stand for?

Answer 9

“annual equivalent rate”

Question 10

List 4 places you can find information out about saving accounts.

Answer 10

• leaflets from the providers
• online information from the providers
• comparison sites on the internet
• articles in newspapers

Question 11

What will ethical funds/investing ensure?

Answer 11

Ethical funds will ensure that your money is not investing in companies that destroy the environment or those involved in the arms trade, animal testing, gambling, pornography or those that support repressive regimes.

Question 12

What bank attempts to do business in an ethical way?

Answer 12

The Co-operative bank

Question 13

What do you have to make decisions about before choosing your saving product? (5 things)

Answer 13

• the amount that you can save
• the length of time for which you want to save
• how important easy access is to you
• the reason why you are saving
• the risk that you are willing to take

Question 14

What long-term investments are there?

Answer 14

• investing in shares
• buying a property
• paying into a pension

Question 15

What are the 3 main ports of difference between saving accounts?

Answer 15

• the interest rates paid by the provider
• the amount of money that you need to deposit
• the length of time for which you agree to leave the money in the account

Question 16

What do banks and building societies offer?

Answer 16

Banks and building societies offer the widest range of savings and investment products fr different terms and with different interest rates.

Question 17

What does the Post Office provide?

Answer 17

The post office provides a range of saving accounts.

Question 18

What is the main advantage of the Post Office?

Answer 18

The main advantage of which is the provider’s convenience and that access is simply.

Question 19

What do supermarkets offer?

Answer 19

Supermarkets offer a wide variety of savings and other products offer.

Question 20

What does NS&I stand for?

Answer 20

National Savings and Investments

Question 21

What does the NS&I offer?

Answer 21

The NS&I offers a wide range of saving products to personal savers and investors.

Question 22

What happens to the money saved by the NS&I?

Answer 22

The money saved is lent to the government to help it pay for public services that are not fully financed by taxes.

Question 23

What are credit unions?

Answer 23

Credit unions are financial co-operatives owned and controlled by their members.

Question 24

What do credit unions offer?

Answer 24

They offer savings accounts, and are local, ethical and know what their members want. Many credit unions now offer a range of services, including a savings account, ISAs and Christmas saving clubs.

Question 25

What does the common bond that each credit union have mean?

Answer 25

This common bond may mean that the members are all living or working in the same area, working for the same employer or belong to the same association.

Question 26

What are the advantages of credit unions?

Answer 26

• Credit unions have access within the local area
• They can encourage their members to save small amounts on a regular basis or if people do not want to have a bank account.

Question 27

What are saving stamps schemes?

Answer 27

Saving stamps schemes are where you put away a little bit each month over the yea to pay for a big shopping spree. You record your savings in a booklet with stamps in it or the scheme uses an electronic card.

Question 28

What is the advantage of saving stamp schemes and saving clubs?

Answer 28

You can put a bit of money to one side each time you go shopping.

Question 29

What is the disadvantage of saving stamp schemes and saving clubs?

Answer 29

You do not get paid any interest and you have to spend the money at the shop which you have made the savings.

Question 30

What are Christmas clubs?

Answer 30

They are very like saving stamp schemes, you save a bit towards the high costs at Christmas time. This can be done through the supermarkets or shops such as your local butcher.

Question 31

What is the disadvantage of Christmas clubs?

Answer 31

You can spend the money only at the supermarket or shop with which you have saved.