1. Using money to make money
Topic 7

2. Learning Intentions
By the end of this topic you will be able to understand some ways to use your money to make more money, including:
National Savings and Investments (NS&I)
Premium Bonds
The National Lottery
Share
Gambling

3. Risk and Reward
In this topic we are looking at ways in which you can take a chance to make a lot of money. This means that we need to think about risk. When you take a risk on something you have to consider whether the potential reward is worth it. Risks can be considered as High Risk or Low Risk. With High Risk the rewards are high but unlikely whereas with Low Risk the rewards are low but likely.

4. Topic 7 – Money to Make Money
Shares
Premium Bonds – – ERNIE Electronic random number indicator equipment
win with Premium Bonds
UK Lottery – six numbers run by Camelot – money raised for good causes and some given to the government –
1-13,983,816 to win on the lottery jackpot
1-54 can win something – –lottery.co.uk

5. Shares
Some people prefer to invest their money in shares. The potential rewards are much greater than the interest you would receive in putting your money in a bank account.
If you buy a share in a company you are entitled to a share of the profits each year. This is known as a Dividend.
You can also sell your shares on the stock exchange.

6. Premium Bonds
NS&I sells and manages Premium Bonds. These are a very safe form investment as the money is being to the government. Instead of earning interest premium bond holders are entered into a draw each month The winning numbers are generated by a computer known as ERNIE which stands for Electronic Random Number Indicator Equipment. You can cash in your premium bonds and get your original investment back.

7. The National Lottery
The Government introduced the National Lottery in 1994 to raise money for good causes and to collect Lottery duty (a form of tax).
There are now a variety of different games and scratch cards available. The Lottery is run by an organisation called Camelot on behalf of the government.
The odds of winning the jackpot (having all 6 numbers) is almost 1 in 14 million.

8. Activity 7a
Read pages 119 to 125
Answer Activity 7a in your jotter

9. Gambling
The key feature of gambling is that people are taking a chance: they could win or lose. When people gamble they take the risk that they could lose the money with which the play.
Gambling can be very addictive. When gamblers lose a bet quite often they try another bet with potential higher winnings in order to try to win back the money they have lost.

10. Stocks and Shares
As well as savings accounts, financial service providers offer people the chance to invest their money in other companies. The value of the shares can go down as well as up and you are not always guaranteed a dividend on your shares. The risks of the above happening can be reduced by having an expert choose your shares for you. A variety of shares from different companies is usually chosen to spread the risk.

11. Other Investments – www.bbc.co.uk – go to Business pages
Gold
Antiques
Paintings
Prints
Stamps
Precious stones
Jewellery
Silver
Coins
Good and bad points of each – what can happen investing in the above?

12. Review Questions Read through your Topic 7 notes again.
Answer the Review Questions on Page 128.

13. Using Money Abroad – Foreign Money Calculations
Currency what is it? Unit of money you use in different countries
The Euro – used by 16 of the 27 countries in the European Union – Collectively known as the eurozone – the euro is the legal tender of the eurozone
Micro states – Andorra, Monaco, San Marino, The Vatican City

14. Exchanging money
You need an exchange rate to buy and sell – popular currencies have high exchange rates (good for the country you are visiting)
Areas that are not so popular to visit have heavier charges
To Calculate : Exchange rate and the amount in Sterling
Look at the calculations on page 132 to convert back you have to divide see page 133 – 135
What is commission?

15. Paying abroad Notes Coin
Travellers cheques – in Sterling, US Dollars, Euros, Canadian Dollars
Plastic cards
Travellers Cheques Safer – Expensive to get and cash

16. Exchanging abroad Banks Bureau de change Hotels Shops
You risk losing money when converting back to sterling

17. Using Plastic – Debit Card
You can use at ATM’s
Shops and Hotels
Look for Cirrus, MasterCard or Visa

18. Using Plastic – Credit Card
Currency Converted as you need it – to sterling
You will see what comes off in your next statement