Topic 6 Flashcards
What is the usual time of a short term plan?
• Might run over a year
• Monthly or weekly
How does a short term plan link to the success of a long term plan?
If someone overspends in the short term, then they have no savings to put by to finance the medium to long term want or aspiration
What are the purposes of a long term plan?
• To buy a home
• Paying back a mortgage
• Saving for retirement
What are the factors that influence the spectrum of willingness?
• Their personality
• Amount of money at someone’s disposal
• Stage of life cycle
What are the factors to consider when considering risk/reward?
• Safety of provider
• The reputation the provider
• Regulation
• How it’s accessed
How can the “real” value of money be a risk to saving?
The value of savings can fall due to inflation
What are some risks associated with loans?
• Possibility of interest rate rising during load period
• Number of years for repayment
• Terms and conditions
What do you do to make an informed choice of product and provider?
• Consider the strengths & benefits
• Check risks profiles (your own, the product and the brand)
• Find out charges & any penalties (also flexibility & terms and conditions)
• The extent it fits their own values
What are the factors that should be considered when matching a product to an individual’s situation?
• Intended purpose
• Timescale
• Affordability
• Attitude to risk & risk profile of product and brand
• How the product fits into overall product mix
What are product mixes offered by the provider?
• Saving & investment
• Borrowing
• Insurance
What factors influence the amount someone saves?
• Income
• Amount of current spending (in short term plans)
• Necessity of saving
• Attitudes to savings
Factors that influence how much someone borrows?
• Income
• Other expenditure
• Time period of loan
• Necessity of borrowing
• Attitudes to borrowing
What is a joint demand?
When two products are bought together because they’re complementary
What is the competitive demand?
Two or more products fulfil the same need or want, therefore are in competition with eachother for the customers money
What are some examples of external factors that influence financial decisions?
• Inflation
• Interest rates
• Unemployment
