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
        • 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.
      • 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
        • Inheritance
        • Future aims:
          • -Wants to buy a house.
          • -Wants to get married.
            • Instant access is provided.
      • 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.
                • £1 to open with a taxable 0.8% AER.
                  • £400 in AER per annum
            • 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
          • Organisation's products are attractive compared to others.
            • Interest rates in all other institutions are lower.
      • -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.
  • 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.
      • 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.
      • 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.
  • 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.
        • £1 to open with a taxable 0.8% AER.
          • £400 in AER per annum
    • Direct ISA: -His one is maxed at £15,240 but he could set one up on his wife' name.
      • £30+ gained through AER.

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