financial studies topic 2

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Why do people save for the long term?
People save for long term because they make a decision now to save out of their current income to finance a future medium-term or long-term need, want or aspiration.
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Savers want a good return on their money by the time it matures. Explain?
They hope their savings and investments will grow over the period to give them a good return on the money by the time it matures.
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Explain the term “capital growth”?
The market value of the investment is greater when sold than the amount they paid for it. When they cash in an investment they will receive a lump sum.
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Explain the other main way a person can use a long term saving or investment product when it matures?
They can use their fund for income-the investment will pay out a regular amount that they can use as a part of their monthly income.
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The general rule with savings and investment products is ‘the higher the risk, the greater the return’. Explain?
If someone want to to earn a higher rate of interest on their savings or investment, they need to take a higher risk.
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‘The capital sum a saver deposits is not at risk’. Explain?
The savings accounts do not pay pay a very high interest rate.
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If a provider fails, how much will a saver be guaranteed to get back from the financial services compensation scheme?
£85,000
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Why do savings accounts not pay very high interest rates?
Because the capital sum is not at risk
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List 5 features of a savings account?
Interest Rates,Bonus Incentives,Monthly Deposit Requirements,Account Keeping Fees and ATM Facility
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what is the main aim of an investor?
Investor aim that the capital value of the investment will grow over the period they hold it, and the income they receive will be higher than they can obtain in a savings account.
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why are investment products higher risks?
Investments are at higher risks because there value at any time depends on the performance of the assets in which the money has been placed and also on general movements in the financial markets.
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what is a portfolio?
A portfolio is made up of many different types of savings and investments
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What is a volatile investment?
It is a statistical measure of the tendency of a market or security to rise or fall sharply within a short period of time. It is typically measured by the standard deviation of the return of an investment
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List long term providers of savings and investment products?
Banks,building societies, NS&I and the post office
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Which provider does not offer these products long term?
Credit Unions
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List the long term products offered by the following providers: Friendly societies, insurance companies, investment companies?
They all offer short-term saving accounts and some also provide long-term savings, investments, life insurance, pensions and annuities
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Research how an annuity is different from a pension fund?
Pension funds accept people’s savings throughout their working lives and invest the money so the savers will eventually have a pension to finance their retirement.
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Explain the role of a growth fund manager and what they do to grow a fund more quickly?
When individuals and institutions invest in a fund, they actually invest in the fund's manager. He is responsible for managing the fund's investments and ensuring that the fund's strategy is aligned with its goals.
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What must an investment company take into account when managing an individual’s investment?
There are different types of investment provider which offer packaged products that can tailored for the private investor. They include unit trust, open-ended investment companies and investment trusts which pool the money of many investors.
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Explain the role of a portfolio manager?
Portfolio managers look after a portfolio of various types if financial instrument such as shares and bonds on behalf of customers who have a sizable sum to invest.
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Other cards in this set

Card 2

Front

Savers want a good return on their money by the time it matures. Explain?

Back

They hope their savings and investments will grow over the period to give them a good return on the money by the time it matures.

Card 3

Front

Explain the term “capital growth”?

Back

Preview of the front of card 3

Card 4

Front

Explain the other main way a person can use a long term saving or investment product when it matures?

Back

Preview of the front of card 4

Card 5

Front

The general rule with savings and investment products is ‘the higher the risk, the greater the return’. Explain?

Back

Preview of the front of card 5
View more cards

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