this is when the provider has already made the investments and they manage them
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what is an ISA wrapper?
where people can choose their own shares and put them into what's known as an ISA wrapper
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why is a stocks and shares ISA tax efficient?
because they're free of UK income tax and capital gains tax
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how is a bondholder different from a shareholder?
bondholders recieve income in the form of interest on their bond, usually at a fixed rate and usually twice a year
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why is property seen as a good investment?
becuase property prices tend to move upwards in the long term
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what are other assets people may invest in?
gold and silver, works of art and antiques
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what is the role of a collective investment fund?
they are specialist organisations that carry out investments on behalf of their clients
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what is another name for a collective investment fund?
fund management firms
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what are 3 advantage of a collective investment fund?
diversification, the invetsor takes advantage of the expertise of the skilled manager and the cost of hiring a skilled manager is shared among all the investors
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what are unit trusts?
they are established under a trust deed which is entered into by the promoters of the unit trust (managers) and trustees. they appeal to investors who want to buy shares but are too small and inexperienced to invest on their own
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what are managers of unit trusts responsible for?
investimg the fund, valuing the assets, fixing the price of the units, offering the units for sale and buying unit back from unit holders
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what are trustees of unit trusts responsible for?
ensuring that the managers comply with the terms of the trust deed
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what does open ended mean?
it means that more units can be created when more money is invested and that they aren't allowd to borrow money
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what is an investment trust?
they aren't unitised funds, they are public limited companies. they issue shares which are bought by investors and traded on the stock markets. the money they recieve from the share issues is used to trade in stocks and sharesof other companies
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what does closed ended mean?
the number of shares they issue is limited by their constitution and cannot be easily increased, they are allowed to borrow money
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what are the risks of investing in an investment trust?
the shares that the company invests in might fall in value and the shares of the company itself might fall in value
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what is an open ended investment company fund?
they are a pooled investment vehicle. they have a corporate structure and issues shares but the number of shares can vary according to the number of buyers and sellers in the market. they expand as people invest and shrink as they withdraw
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what are the roles in a OEIC?
an authorised corporate director- role is similar to that of a manager of a unit trust. an authorised person (depositary)- oversees the operation of the company, role is equivalent to that of a trustee in a unit trust
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what is term insurance?
an insurance plan that runs for a fixed amount of time and pays out a lump sum if the insured person dies during term. not an investment policy
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what is an endowment policy?
a life insurance that pays out a lump sum after a specified term or if the person dies before this date
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what is an annuity?
a product that provides income for people when they retire
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what is a final salary pension scheme?
they pay an employee based on the number of years they have worked for the employer and linked to the amount of their salary at the time when they retire
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what is a money purchase pension scheme?
this is where the employee pays into the pension plan over their working life. the amount the employee recives depends on how well the scheme has performed
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what is the maximum amount amount someone can pay into a personal pension plan?
£40,000
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what is auto enrollment?
most workers must be automatically enrolled by their employer into a workplace pension scheme under the pensions act 2008
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what is NEST?
a large, trust based, defined contribution, multi employer pension scheme that aims to ensure the majority of workers are enrolled into an occupational pension
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what is an interim dividend?
a dividend paid by the company before the end of its fiscal year
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what is capital gains tax and under what circumstances does it not apply?
it is tax on any profit made when someone disposes an asset, it applies to most assets, except someone's main home, car or personal possessions disposed of for under £6,0000. the annual exemption amount is £11,000 for individuals and £5,500 for trust
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34. What is the percentage rate to be paid if an individual’s income falls within the basic tax rate band of £33,500?
18%
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Other cards in this set
Card 2
Front
what is an ISA wrapper?
Back
where people can choose their own shares and put them into what's known as an ISA wrapper
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