1. Choosing to save

2. Why do people save? To buy something special (ie: car, wedding, a house...) To put money aside for an emergency To save for retirement

3. Methods of saving High-Street banks Building Societies Internet-only banks National Savings and Investments (NS&I) Post Office card account

4. Types of savings accounts Regular savings accounts Individual Savings Accounts (ISAs) – interest payments are tax free Fixed-term investment accounts – savings cannot be withdrawn for an agreed length of time (term) Share-based savings (ie: Unit Trusts) – savings products that spread risk by investing in a range of shares Government securities – bonds issued by the government through National Savings and Investments

5. Interest rates As a general rule, the rate of interest you will receive can depend on: –The length of time your money is tied up (the ‘term’) –The amount of money you have in the account –Whether or not you have to give the bank notice if you wish to withdraw your savings –Which type of institution you are saving with (ie: internet-only accounts are cheaper to run meaning they may offer you a higher interest rate) –If you are saving regular amounts every month or saving money for a fixed term.

6. The Annual Equivalent Rate (AER) An AER is given so that the interest rate on different savings accounts can be accurately compared. It shows what the interest rate would be if interest was paid and compounded once each year. Compounding = when interest is earned on interest already received. This is calculated so interest rates from different accounts and institutions can be compared.

7. Risk and reward For someone looking for potentially more return on their money or reward, they will usually have to consider a longer-term investment with more risk. Some of the riskier but potentially higher-return methods of saving are: –Shares –Unit Trusts – an investment fund where many investors, who probably know little about share buying, pool their money and buy a variety of shares. They do this to benefit from greater security, as the fund is managed by an experienced fund manager. –Gilts (or government securities) – these are bonds issued by the government. They pay a fixed rate of interest twice a year. Gilts are considered very safe investments as the government is unlikely to go bankrupt or fail to pay back the interest payments. They are bought and sold on the stock market.