Tax is not charged on interest earned allowing the saver to keep all of the rewards for saving.
Interest rates are sometimes slightly higher than in alternative savings accounts.
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Disadvantages of Individual Savings Accounts (ISAs)
Notice is often required to make withdrawals and according to the agreement there may be a limit set on the number of withdrawals made.
If the saver makes more withdrawals than set out in the agreement then the penalty may cancel out the tax savings.
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Advantages of Deposit and Savings Accounts
Interest is earned on positive balances.
Accounts sometimes require regular deposits of a set amount forcing the saver to follow a savings plan.
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Disadvantages of Deposit and Savings Accounts
Interest earned is taxed.
The percentage rate of interest paid on savings is likely to be lower than interest to be paid on borrowing, therefore the benefits of savings are lost if the customer is borrowing at the same time.
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Advantages of Premium Bonds
Chance of winning substantially more than could be earned in interest.
Can be easily withdrawn with no loss or penalty.
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Disadvantages of Premium Bonds
No guaranteed return on investment.
Maximum amount reviewed annually by the government.
The amount invested, assuming zero or low returns, loses value due to inflation
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Advantages of Bonds and Gilts
Regular fixed returns.
Spreads risk across a range of markets.
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Disadvantages of Bonds and Gilts
Risk of losing some or all of the value of the investment if the bond or guilt value falls.
Interest payments may not be received if the issuer is unable to make payments.
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Advantages of Shares
Share prices fluctuate offering a potential high reward.
Shareholders' returns can include dividend payments and an increase in share value.
As part owners in a business there may be additional benefits including discounts and special offers.
For some inv
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Disadvantages of Shares
Share prices fluctuate offering a potential high risk.
There is no guarantee of any reward or return as all of an investment can be lost.
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Advantages of Pensions
Encourages individuals to save throughout their working life for retirement.
Depending upon the policy, an individual's savings may be boosted by an employer's contributions increasing the final value of saving.
Regular payments are deducted, sometimes at
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Disadvantages of Pensions
Movement between jobs may mean that one policy stops and another starts, thus reducing the overall cumulative value of the savings.
Final outcome is difficult to predict.
If compulsory payments are deducted this may affect short-term living standards.
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Other cards in this set
Card 2
Front
Disadvantages of Individual Savings Accounts (ISAs)
Back
Notice is often required to make withdrawals and according to the agreement there may be a limit set on the number of withdrawals made.
If the saver makes more withdrawals than set out in the agreement then the penalty may cancel out the tax savings.
Ther
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