Savings and investments

• What is an ISA?

  A savings account where the holder isn't charged income tax on interest received - 2 types: Cash , and Stocks and shares.
• Advantages of an ISA

  • Tax-free savings
  • Saver keeps all savings rewards
• Disadvantages of ISA

  • Limit on number of withdrawals
  • Limit on amount put in
• What is a deposit account?

  A bank account that pays fixed interest over set period of time - can't make withdrawals during this time.
• What is a savings account?

  Allows instant access to savings - pays a variable amount of interest which is taxable.
• What are premium bonds?

  Way of saving where savers are given a chance to win a tax-free cash prize.
• Advantages of premium bonds

  • Savings are secure
  • Cash in at any time
• Disadvantages of premium bonds

  • May win nothing
  • No interest
• What are bonds and gilts?

  Fixed interest securities issues by companies - Bonds are debt securities issued by governments or corporations to raise money. Gilts are specific types of bonds issued by the UK government. - Pay investors regular interest over a set period of time.
• Advantages of bonds and gilts

  • Gilts less risky than bonds
  • Gilts are backed by government - secure
  • Bonds are lower risk than property or equities
  • Bonds pay interest on regular times
• What are shares?

  Shares give investors partial ownership of a company - in return for this they receive dividends based on performance of the business.
• Pros of buying shares

  • Receive dividends
  • Own part of a company
• Cons of shares

  • Risk of loss
  • Large dividends may be taxed
• What is a pension?

  A long-term savings scheme to help save for retirement.