Chapter 10- Saving & Investing

Question 1

Savings

Answer 1

The part of our income that we don’t spend

Question 2

What things must you consider when choosing a place to save?

Answer 2

• What rate of interest we can get on our savings
• If we can withdraw our money at any time
• Which financial institution has the most convenient opening hours
• What extra benefits can we get for saving our money with one particular financial institution

Question 3

Investing

Answer 3

Using our money to earn a greater return than is possible from an ordinary savings account

Question 4

Building society

Answer 4

A financial institution that provides a wide range of banking services

Question 5

What are the advantages of saving your money with a building society?

Answer 5

• They offer a wide range of banking and financial services
• They usually pay a good rate of interest on savings
• Many branches around the country
• They have longer opening hours than most commercial banks

Question 6

What are the disadvantages of saving your money with a building society?

Answer 6

• DIRT must be paid

* You may have to give notice before withdrawing money

Question 7

Credit union

Answer 7

Co-operative organisation where people save regularly and lend to each other at low rates of interest

Question 8

What are the advantages of saving your money with a credit union?

Answer 8

• Convenient locations
• Flexible opening hours
• Rates on loans are very low
• No DIRT

Question 9

What are the disadvantages of saving your money with a credit union?

Answer 9

• The amount of money you can borrow relates to how much money you saved
• They don’t offer the same amount of services as a commercial bank

Question 10

Postal money order

Answer 10

An order from one post office to another to pay a certain sum of money to the person named in the order

Question 11

Simple interest

Answer 11

Where the interest is a % of the amount of money you have put into the account

Question 12

Compound interest

Answer 12

Where interest is calculated as a percentage of the total amount in the account at the end of each year

Question 13

Savings bond

Answer 13

Savers purchase saving bonds for a fixed amount between €100-€120,000. If they hold on to bonds for 3 years they receive total interest of 10%

Question 14

What are the benefits of savings bonds

Answer 14

~Free of DIRT
~No charges or fees
~Savings are state guaranteed

Question 15

Saving certificates

Answer 15

Savers purchase for a fixed amount between €50-€120,000. If they hold the certificate for 5 years and 6 months they receive total interest of 21%

Question 16

What are the benefits of saving certificates?

Answer 16

~Free of dirt
~No charges or fees
~Savings state guaranteed

Question 17

What are the advantages of saving with An Post?

Answer 17

~Open six days a week
~Savings guaranteed by state
~Interest rates available from An Post are very competitive
~Withdrawals and lodgements can be made at any post office

Question 18

Compound annual rate (CAR)

Answer 18

Actual rate of interest you are receiving on your savings or investment from a financial institution

Question 19

What factors should you consider before investing?

Answer 19

♦How much money could we make?
♦Is their any risk?
♦How easy is it to turn the investment back into cash?
♦Will we have to pay tax on the money we earn from the investment
♦What is the minimum amount we could invest and can we afford it?
♦What do we want to get from our investment?