Saving & Investing Money

Saving & Investing Money

Savings: Part of our income we choose not to spend

Investing: Putting money aside to get a better return on it in the future

Liquidity: How quickly we can get our money back when we want it

Generally low-risk, low-reward schemes that provide easy access to our money when required.

Often involves greater risk to the money invested and it may not be possible to get it back immediately. However, offer greater potential for rewards.

Reasons to save / invest money:

1. Future planned expenditure EX: College/Car
2. Emergencies EX: hospital
3. Major family events EX: marriage / funeral
4. Retirement
5. Improve credit rating

Factors to consider when saving/investing:

1. Risk
2. Reward
3. Liquidity
4. Taxation
5. Convenience
6. Benefits
7. Terms or conditions

1. RISK:

Will your savings be safe & secure? Savings with An post are state-guaranteed

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Saving & Investing Money

Business

2. REWARD Interest is a reward for saving your money with a financial institution. It is extra money you'll receive on top of what you've saved. The rate quoted is the Annual Equivalent Rate (AER). This tells the saver the full rate of interest if all its money is left in a savings account for a full year.

3. LIQUIDITY Some savings accounts require you to give the Financial institution written notice, and penalties may apply if you withdraw earlier than the terms agreed.

4. TAXATION Deposit Interest Retention Tax (DIRT) is a tax on interest earned on savings.

5. CONVENIENCE Is the account convenient for regular lodgements and withdrawals? ⇒ location, opening hours, online

6. FUTURE BENEFITS Loans or bonus interest payments?

7. TERMS & CONDITIONS Fees involved in operating a deposit account? Minimum or maximum deposit required? Penalised for early withdrawal of money?

Where to save money?

1. Commercial banks
2. An Post
3. Credit union
4. Building societies

1. TYPES OF DEPOSIT ACCOUNTS PROVIDED BY COMMERCIAL BANKS

Demand deposits: Withdraw money when you want. Pay a very low rate of interest.

Term deposits: Require leave money for a certain length of time. Week - 5yrs. Higher interest rate than demand deposits. Penalty for withdrawing early.

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Saving & Investing Money

Notice deposits: Have to give bank notice of your intention to withdraw money. → 21 day notice deposit account means the saver must notify the bank 21 (banking) days in advance of withdrawal.

2. AN POST

Competitive interest rates & state-guaranteed Interest earned is not subject to DIRT. Offers Prize Bonds → prizes to be won each week.

3. CREDIT UNIONS

Savings Account: May give you a dividend at the end of year. Money can be lodged at any time

Deposit Account: Competitive rate of Interest but will be subject to DIRT

4. BUILDING SOCIETIES

Pay interest on savings & lends money for buying or upgrading property. Wide range of services offered.

→ EBS (Educational Building Society)