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Types of Saving and Investing - Coggle Diagram
Types of Saving and Investing
Types of Investing
Premium Bonds
A form of investment when an individual can invest money into the Government to be put into a lottery where they an win tax free prizes
Disadvantages:
No guaranteed return
Inflation can erode savings
Limits ability to have regular income
Advantages:
Chance to win £1,000,000 and other tax-free prizes
Can invest £100 or more
Total security of money
Bonds and Gilts
A form of investment when someone invests into the Government in return for a fixed rate of investment on the money lost
Disadvanatges
Risk of not being repaid
Money can only be released when it has matured
Advantages:
A safe and sound way to invest
tend to have higher rates of interest
Types of Savings
Savings Account
A form of savings that encourage people to save money because they will have higher interest rates
Disadvantages:
Lower interest rates than ISAs
Better rates for locking money
Interest rates typically lower than inflation
tax is charged on interest gained
Advantages:
money is safe and protected by Government regulations
Competition enables people to gain perks and better investment
Help to negate the impacts of inflation
Easy access
Pensions
A form of savings when an individual and a company put a percentage of their wages and profits into a Bank account, which can be withdrawn when the individual reaches retirement age
Disadvanatges:
Determined by success f the stock market
Money is tied up
Pension funds has t be used to buy annuity
tax is payable on income
Advantages:
Money put in will qualify for a tax relief
Employees will top up amount paid
Ability to have a tax free lump sum (quarter of the value)
ISA ( Individual Savings Account)
A form of saving when an individual can invest money into an account and any interest gained is tax free
Disadvantages:
Better interest if money is locked
Max deposit per account is £15,240
Withdrawn money can't be put back in
Not flexible (cash ISA - investment ISA but not vice versa)
Advantages:
No tax on interest gained
No Capital Gains tax on profits from share price
No tax on dividend income
Higher rates of interest