1. Unit 3- Personal and Business Finance
BTEC Year 12
Unit 3- Personal and Business Finance

2. Aims of today
Recap over different bank accounts and methods of payment
Introduce you to different types of savings and investment accounts.

3. Starter (10 mins)
What is meant by a standard account and what are its features?
What is meant by a premium account and list some of its features?
List and explain 3 different types of borrowing.

4. Savings and investments
Happens when you are earning or receiving more money than your expenditure.
Different types-
Individual Savings Accounts (ISA)
Deposit and Saving Accounts
Premium Bonds
Bonds and gilts
Shares
Pensions

5. Individual Savings Accounts (ISA)
Holder is not charged income tax on the interest received.

6. Advantages and Disadvantages
Tax is not charged on interest earned allowing the saver to keep all of the rewards of saving.
Notice is often required to make withdrawals according to the agreement.
Interest rates are sometimes slightly higher than an alternative savings accounts.
If the saver makes more withdrawals than set out in the agreement then the penalty may cancel out their tax savings.
Tax free is limited.

7. Deposit and Savings Accounts
These are accounts where interest is paid on the balance and normally holder needs to give notice before withdrawing funds.

8. Advantages and Disadvantages

9. Premium Bonds
A government scheme that allows individuals to save up to a set amount by buying bonds.
The bond holder does not receive interest but each bond is placed into a regular draw for cash prizes.

10. Advantages and Disadvantages

11. Bonds and Gilts
These are fixed term securities where the lender lends money to companies and governments in return for interest payments.
The money is invested for a specific amount of time.

12. Advantages and Disadvantages

13. Shares
Shares involve investment in business in return for equity. The shareholders become a part owner of the business. The shareholders will receive dividends from the companies profits and will also want the value of shares to increase.

14. Advantages and Disadvantages

15. A personal pension is fundamentally a simple product:
Pensions
Long term savings plans where individuals make regular contributions called premium payments throughout their working life.
This is then repaid as either a lump sum, regular payments or a combination of the two upon retirement.
Pensions can come from the state, company or private.
A personal pension is fundamentally a simple product:
It is just a tax-free pot of cash you, your employer (and sometimes the Government) pays into, as a way of saving up for your retirement.(

16. Advantages and Disadvantages

17. Can you explain the difference between saving and investment?
Draw a concept map about different methods of saving and investment. For each method, weigh up the risk versus the reward and aware the method a mark out of 10, with 10 being the highest risk and 1 being the lowest risk.
Which method of saving or investment do you think offers the lowest risk at the highest reward? Justify your answer.

18. Pair activity
You have £2500 and must invest or save it for at least 5 years.
Mind map all your options- showing risk potentials and rewards.
Identify preferred method. Find an account that offers the highest return.
How much will your savings be worth in 5 years time?

19. Homework (SMHW) Set: Friday 30th September Due in: Tuesday 4th October
You read about a new form of investment called ‘Crowd funding’. Visit websites as part of your research.
Choose one of more businesses to invest in. Calculate your expected return on your £2500 in 5 years’ time.
Present your saving and investment options to the rest of the class next lesson.
As a class, you will be expected to reach an agreement on what would be the best use of the money.

20. SMHW
Please view SMHW for a specific task I would like you to do for Tuesday’s lesson.