Saving + investing

• Saving


  Part of the income that we choose not to spend
• Reasons for saving money

  • For future planned expenditure (e.g. new car, holiday, home extension)
  • For emergencies (e.g. washing machine breaks)
  • For major family events (e.g. wedding)
  • For retirement
  • To improve credit rating (lenders like to see regular savings)
• Credit rating/creditworthiness


  Reflects how likely a person is to repay a loan
• Factors to consider when saving


  • Risk
  • Reward
  • Interest
  • Taxation (some An Post-tax savings accounts have no taxes)
• Interest


  A reward for saving your money with a financial institution. It is extra money you receive on top of the money you have saved.
• Liquidity


  How easy it is to withdraw or access your savings should you need to, i.e. how quickly can your savings be turned back to cash.
• Taxation


  Will you have to pay tax on your interest?
• Deposit Interest Retention Tax (DIRT)

  A tax on interest earned on savings. Some savings products offered by An Post are not subject to DIRT.
• Where to save


  • Commercial Bank (e.g. Bank of Ireland)
  • An Post
  • Credit Union
  • Building societies (e.g. EBS)
• Commercial Banks


  • Banks that households and individuals deal with (e.g. Bank of Ireland, AIB)
• Demand deposits


  Allow you to withdraw your money when you choose to. You do not have to give the bank any notice. Low interest rates.
• Term deposits


  Require you to leave your money in the account for a certain length of time (7 days to 5 years). Higher interest rates. It's possible to withdraw money early, but there will be a penalty.
• Notice deposits


  Require you to give the bank advance notice of your withdrawal (e.g. 10 day deposit notice account).
• Financial Institutions


  • An Post
  • Credit Union
  • Building Societies
• An Post


  Offers a range of State Savings products, including deposit accounts, savings bonds, saving carts and price bo
• Credit Union


  Owned by members, who save together and lend to each other at a competitive rate of interest
• Building Societies


  The main reason for saving in a building society is to get a mortgage
• Simple Interest


  Money you can earn by saving money (the principle)
• Calculating Simple Interest


  Interest = Principle x time x rate
• Simple Interest Calculation


  • Megan saves €1,000 at a rate of 2% for 2 years. Interest = 1,000 × 2 × 2% = €40
• Compound Interest


  Interest is added to the savings and then that added interest also earns interest from then on
• Dividend


  A payment to shareholders based on the numbers of shares owned
• an Post

  An Post offers a range of State Savings products, including deposit accounts, savings bonds, saving certs and price banks
• Credit Union


  A credit union is owned by members, who save together and lend to each other at a competitive rate of interest
• EBS Building societies


  The main reason for saving in a building society is to get a mortgage
• Calculating Interest on Savings


  The simple formula is: Interest = Principle x time x rate