Savings And Investments

Question 1

2 advantages of an ISA

Answer 1

Not charged income tax on the interests or profits you earn
Higher interest rates

Question 2

2 disadvantages of an ISA

Answer 2

Limit on amount you can put each year
Notice for withdrawal

Question 3

2 advantages of deposit and savings accounts
(Fixed deposit account)

Answer 3

Variable amount of interest is paid
Fixed deposit account pays a set amount of interest over a set period of time

Question 4

2 disadvantages of a deposit and savings accounts

Answer 4

Interest is taxed
Notice for withdrawal for a fixed deposit account

Question 5

2 advantages of premium bonds

Answer 5

Given the chance to win a tax-free cash prize every month
Can be easily withdrawn

Question 6

2 disadvantages of premium bonds

Answer 6

No guaranteed return on investment
Amount invested loses value due to inflation

Question 7

1 advantage of bonds and guilts

Answer 7

Receive fixed interest rates

Question 8

1 disadvantage of bonds and guilts

Answer 8

The value of bonds and guilts can fall

Question 9

1 advantage of shares

Answer 9

Shareholders can receive dividends based on the performance of the business

Question 10

2 disadvantages of shares

Answer 10

Shareholder can lose their investment if the company underperforms
Large dividend returns may be subject to tax

Question 11

2 advantages of pensions
(Paid through national insurance contributions)

Answer 11

Encourages saving for retirement
Employer can contribute

Question 12

1 disadvantage of pensions
(Paid through national insurance contributions)

Answer 12

Can’t access money until retirement age