Case Study 2
- Created by: Kazor07
- Created on: 02-01-17 15:54
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- Case Study 2
- National Savings and Investments (NS&I)
- Gary- Aged 28 has been left £50,000 in a will.
- Buy Premium Bonds
- Why? -Hopes to win a prize and safe to save.
- Key features: - Min £100 -Max £50,000 -Not available from Post Office. -Odds 30,000 to 1 June 2016. -Backed by HM Treasury so secure. -Instant access.
- -Chances of winning are low
- Facts: -Holds £110 Bil and 21 Mil people. -1.25% paid out (£62.8 mil). -2 Mil winners monthly.
- Decreasing number of winners by 300k monthly and 0.1% decreased value.
- -Chances of winning £1 mil stay the same. -More £100 and £50 prizes.
- Fewer £25 prizes
- Estimated 5% return over 5 years.
- TAX FREE
- That 5% equals to £2500 for Gary's £50k investment.
- £500 per year
- That 5% equals to £2500 for Gary's £50k investment.
- TAX FREE
- Decreasing number of winners by 300k monthly and 0.1% decreased value.
- Why? -Hopes to win a prize and safe to save.
- Inheritance
- Mature adult
- Worker at a car factory.
- Future aims:
- -Not keen to get married.
- -Wants to buy a house.
- Needs instant access to money to pay for possible mortgage.
- Buy Premium Bonds
- Ron- Aged 24 has been left £50,000 in a will.
- Young adult
- Teacher
- Subject to a pay freeze when wages don't increase
- May want to live of savings income which won't be possible
- Subject to a pay freeze when wages don't increase
- Teacher
- Inheritance
- Future aims:
- -Wants to buy a house.
- -Wants to get married.
- Instant access is provided.
- Young adult
- Deposit money in NS&I savings account.
- Why? -Hopes for higher interest rate.
- -Interest rate may go down. -0.5% 2009-2016 -0.25% 2016 -WAS in 'BEST BUY' table but not anymore, so something may currently be better.
- Key features: -Easy and instant access. -No penalties for withdrawing. -Operated online.
- Saving accounts
- Direct ISA
- Income Bonds
- £500 to open with a taxable 1% AER.
- £500 in AER per annum.
- Direct saver
- Investment account
- Reduced interest rates from 0.75% to 0.45%.
- 0.55% lower than with bonds.
- May still be reduced as variable. -This is taxed.
- 0.55% lower than with bonds.
- Reduced interest rates from 0.75% to 0.45%.
- £1 to open with a taxable 0.8% AER.
- £400 in AER per annum
- Investment account
- £500 to open with a taxable 1% AER.
- Direct ISA: -His one is maxed at £15,240 but he could set one up on his wife' name.
- £30+ gained through AER.
- NO TAXATION
- NO TAXATION
- £30+ gained through AER.
- Income Bonds
- Organisation's products are attractive compared to others.
- Interest rates in all other institutions are lower.
- Direct ISA
- Why? -Hopes for higher interest rate.
- -NOT a Bank -they offer cash savings and investments -Saving with the government therefore safe.
- Other Options:
- Investment banks and retail banking
- Better returns compared to a low 0.25% rate.
- That 5% equals to £2500 for Gary's £50k investment.
- £500 per year
- 0.45% rate offered is higher than the average.
- That 5% equals to £2500 for Gary's £50k investment.
- Better returns compared to a low 0.25% rate.
- Investment banks and retail banking
- Other Options:
- Gary- Aged 28 has been left £50,000 in a will.
- National Savings and Investments (NS&I)
- External social and economic influences:
- -Increase in NET immigration.
- -2nd hand cars more demanded.
- -Difficult to find a job.
- Low pay or little work.
- Future aims:
- -Not keen to get married.
- -Wants to buy a house.
- Needs instant access to money to pay for possible mortgage.
- Risk of deflation
- BoE will not change the Interest rate because if it goes up people save not spend and those with variable loans are in trouble.
- After a recession
- Consumer confidence and spending decreased.
- Low pay or little work.
- Consumer confidence and spending decreased.
- External social and economic influences:
- Economic uncertainty
- -BREXIT -Boom Recession
- Future aims:
- -Wants to buy a house.
- -Wants to get married.
- Instant access is provided.
- Economic uncertainty
- AER would increase.
- Inflation may rise.
- His savings will lose value over time.
- Interest rate may rise.
- He doesn't get interest on P Bonds.
- -Increase in NET immigration.
- Direct ISA
- Income Bonds
- £500 to open with a taxable 1% AER.
- £500 in AER per annum.
- Direct saver
- Investment account
- Reduced interest rates from 0.75% to 0.45%.
- 0.55% lower than with bonds.
- May still be reduced as variable. -This is taxed.
- 0.55% lower than with bonds.
- Reduced interest rates from 0.75% to 0.45%.
- £1 to open with a taxable 0.8% AER.
- £400 in AER per annum
- Investment account
- £500 to open with a taxable 1% AER.
- Direct ISA: -His one is maxed at £15,240 but he could set one up on his wife' name.
- £30+ gained through AER.
- £30+ gained through AER.
- Income Bonds
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