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Finance topic 5 - Coggle Diagram

- - - - how often money is saved
        people can usually achieve higher rates of return on their savings by saving a specific amount each month.
        
        how long the money is saved the longer the term that the savings are held, the higher the interest rate tends to be. there are different categories of savings account:
        instant access accounts
        notice accounts
        fixed period accounts or bonds
        the fixed rate of return means that savers know what the AER will be throughout the life of the product. products that are instant access or notice accounts usually have a variable interest rates that move up and down with changes in the Bank rate.
        
        the number of withdrawals the saver can make
        savings accounts called "instant access" or "easy access" allow as many withdrawals as the saver wants, whereas same accounts called "restricted access" only allow a certain number of withdrawals to be made each year.
        
        the account applicant and operation channels
        accounts that the customer applies for and operates online tend to offer higher rates of return than accounts that are operated by a passbook in a branch, or by cash card, telephone or post.
        
        the tax status of the account
        the conservative-lib Dem coalition government announced changes to the way that savings interest is taxed. the interest earned on some accounts are tax-free while on other accounts the saver must pay tax on any interest that exceeds their 'personal savings allowance'.
        
        introductory bonuses
        some savings accounts have fixed introductory bonuses that boost the return in the first year of the account
- - - - both the CPI and RPI measure inflation by calculating the average change in prices of a basket of goods over a 12-month period.
        
        the basket of goods used as the basis of the CPI or RPI is made up of around 700 consumer goods and services that represent the spending patterns of uk households.
        
        goods and services are regularly added to and removed from the basket to reflect current spending preferences.
        
        the main difference between CPI and RPI is that RPI includes mortgage interest payments and other owner-occupier costs, while CPI does not.
        
        an inflation rate is an average across a wide range of goods. the causes of inflation, such as a greater demand for goods and changes in wages.
- - - - the interest on individual savings account (ISAs) is paid free of tax.
        
        the money in an individual savings account (ISA) can be invested in cash and / or stocks and shares. cash ISA's are available for savers from the age of 18. the interest on a cash savings allowance. the return on stocks and shares ISA is paid free of income tax where the return is in the form of interest (where the return is paid in the form of dividends, income tax is payable). any growth in the value of the capital invested in a stocks and shares ISA is not subject to capital gains tax.
        
        savers are only allowed to contribute to one cash ISA and/or stocks and shares ISA in a tax year. there are different cash ISA products that offer instant access or fixed terms. savers can transfer funds from a cash ISA into another cash ISA or into stocks and shares ISA during a tax year. they can also transfer funds from one stocks and shares ISA to another stocks and shares ISA and from a stocks and shares ISA to a cash ISA.
        
        as well as the adult ISA there is a junior ISA designed for savers under 18, with its own specified deposit limit. the junior ISA also pays interest free of tax and offers cash and/or stocks and shares options. the junior ISA replaces child trust fund (CTF) account so is only available to young savers who do not have a CTF. savers with a CTF are able to transfer the funds to a junior ISA if thewy wish. anyone can pay money into a junior ISA as long as they do not exceed the deposit limit for the tax year.only the child named on the junior ISA can withdraw money from the account and they cannot do this until they are 18 years old.
        
        first-time buyers can save up to £200 a month towards their first home in a help to buy ISA and the government will boost their savings by 25% when the account is closed. that is a £50 bonus for every £200 saved and all interest earned is tax free.
        first-time buyers who save £12,000 in their help to buy ISA will be eligible for the maximum government bonus of £3000.
        as the accounts are for individuals, couples can save separately and both receive the government bonus.
        the help to buyt was replaced by the lifetime ISA.
        
        anyone aged over 18 and under 40 can open a lifetime ISA to help them buy their first home or to save for their retirement. up to £4000 can be saved into this ISA every year until the saver reaches the age of 50. the government will add a bonus of 25% of the saver's contributions at the end of every tax year. this means that savers who add £4000 in one tax year will receive a bonus of £1000. savers who withdraw the money before age 60 and who are not buying a first home will pay a 25% withdrawal charge on the total, losing the government bonus.
- - - - people who want 100% of their savings guaranteed, regardless of the ammount, can save with national savings and investments (NS&I) which is backed by her majesty's treasury.
        
        these types of investments are much more risky than cash as they gain or lose value according to movements in the stock market, which can be unpredictable.