Post by Admin on Jun 19, 2016 11:35:27 GMT
Reasons why to save money
- To pay for something you can't afford right now (e.g. A car)
- To provide an income for the future (e.g. Pension)
- In case of unforeseen events (e.g. Illness)
Investing
- Investing refers to where you put your savings to work to earn an income called interest. People invest to make a profit.
Simple Interest
The formula for Simple Interest is
Principal (Sum saved) x Time (years) x Rate of interest รท 100
Compound Interest
- With compound interest, the interest is added to the principal so that you get interest on the interest. This means you get more interest in the long run. The CAR (Compound Annual Rate) is the rate you get when taking this into account. It is higher than the simple interest rate.
DIRT
- DIRT (Deposit Interest Retention Tax) is a tax paid on the interest that you receive on your savings.
Methods of investing
- Commercial banks
- Building societies
- Credit unions
- Insurance companies
- An Post
- Prize bonds
- Stock markets
Commercial banks
- A commercial bank consists of two different types of accounts where the person can invest in.
Deposit account (also known as a Savings account)
- Money is deposited and can be withdrawn on demand
- Interest is paid
- You pay DIRT
Current account
- Chequebook
- Debit (Laser) card
- Overdraft (i.e. borrowing money) (You will pay interest on this)
Building societies
- Limit on how much you can withdraw on demand
Credit unions
Savings account
- When you save money, you become a member.
- You get a share of any profit the Credit Union makes.
- You do not pay DIRT on interest received.
- If a member dies, insurance will double the value of the deposit.
Lending
- Loans up to three times the value of shares held (i.e. savings).
- If a member dies, insurance pays off the loan.
- The interest rate may be lower than the commercial banks.
Insurance companies
Endowment policy
- Fixed regular payments are made.
- After an agreed period, a tax free lump sum is paid out.
- Used to save for a pension or to pay off a mortgage.
National Instalment Savings Scheme (NISS)
- Save a fixed sum each month for a year.
- The money is left on deposit for one to five years.
- The longer you leave the money in the account, the higher the interest rate paid.
- The interest is tax free.
Prize bonds
- Sold in units of 10 euro.
- No interest is paid.
- Each bond is entered in a weekly prize draw.
- Can be cashed in at any time for the original cost.
Stock markets (Buy shares in a company)
- If you sell the shares, you may make a capital gains profit.
- The company may pay a dividend.
- Capital Gains Tax (CGT) is payable on any profit you earn.
- Income Tax is payable on dividends.
How to open a current account
- Fill in an application form
You must show the following:
*Photo identification
*Proof of address
*Specimen signature
Operating a current account
- Current accounts are used to make day-to-day payments.
- Paypath gives the account holder the advantage to have their money directly lodged into their account.
- The employer does not need to have large amounts of cash on the premises and does not need to take time to fill in cheques for each employee. Plus he / she does not have to take time off work to go to the bank.
Making payments from a current account can be done by:
- Cheque
- Credit transfer
- Bank draft
- Standing order
- Direct debit
Difference between Standing Order and Direct Debit
- Standing order is an instruction to pay a FIXED sum into a bank account at regular intervals.
- Direct debit is the permission given to a company to take money directly from the customer's account and the sum VARIES.
Methods of making payments (those ones above are only current account methods):
- Cash
- Credit card
- Charge card
- Debit card
- Store card
- Postal money order
- Traveller's cheques
Factors to consider when choosing a method of payment
- The cost to you and the recipient
- Security: Will your payment be safe from theft until the right person cashes it?
- Convenience to you and to the payee
Terms
Payee - The person receiving payment. Their name follows the word 'Pay' on the cheque.
Drawer - The person writing the cheque.
Drawee - The bank on which the cheque is drawn.
Negotiating a cheque - Bringing the cheque to a bank to get money for it.
Stale cheque - A cheque presented to the bank more than six months after it was written. The bank will not accept it.
Blank cheque - A signed cheque which has at least one piece of information left out.
Endorsed cheque - The payee has signed the back of the cheque so someone else can negotiate it.
Post-dated cheque - A cheque with a date in the future on it. It cannot be negotiated before that date.
Receipt cheque - A cheque that must be signed by the payee before it can be negotiated.
Dishonoured cheque - The drawee bank has refused to pay out on the cheque. Perhaps the drawer doesn't have enough money in their account.
Stopped cheque - The drawer has instructed the bank to dishonour the cheque.
Crossed cheque - Two parallel lines on the face of the cheque means the cheque must be paid into a bank account. Further instructions may be written between the lines. A cheque is crossed to make it as safe as possible (A/C Payee only must be written in between these parallel lines to make it as safe as possible).
Open cheque - A cheque that is not crossed.
- To pay for something you can't afford right now (e.g. A car)
- To provide an income for the future (e.g. Pension)
- In case of unforeseen events (e.g. Illness)
Investing
- Investing refers to where you put your savings to work to earn an income called interest. People invest to make a profit.
Simple Interest
The formula for Simple Interest is
Principal (Sum saved) x Time (years) x Rate of interest รท 100
Compound Interest
- With compound interest, the interest is added to the principal so that you get interest on the interest. This means you get more interest in the long run. The CAR (Compound Annual Rate) is the rate you get when taking this into account. It is higher than the simple interest rate.
DIRT
- DIRT (Deposit Interest Retention Tax) is a tax paid on the interest that you receive on your savings.
Methods of investing
- Commercial banks
- Building societies
- Credit unions
- Insurance companies
- An Post
- Prize bonds
- Stock markets
Commercial banks
- A commercial bank consists of two different types of accounts where the person can invest in.
Deposit account (also known as a Savings account)
- Money is deposited and can be withdrawn on demand
- Interest is paid
- You pay DIRT
Current account
- Chequebook
- Debit (Laser) card
- Overdraft (i.e. borrowing money) (You will pay interest on this)
Building societies
- Limit on how much you can withdraw on demand
Credit unions
Savings account
- When you save money, you become a member.
- You get a share of any profit the Credit Union makes.
- You do not pay DIRT on interest received.
- If a member dies, insurance will double the value of the deposit.
Lending
- Loans up to three times the value of shares held (i.e. savings).
- If a member dies, insurance pays off the loan.
- The interest rate may be lower than the commercial banks.
Insurance companies
Endowment policy
- Fixed regular payments are made.
- After an agreed period, a tax free lump sum is paid out.
- Used to save for a pension or to pay off a mortgage.
National Instalment Savings Scheme (NISS)
- Save a fixed sum each month for a year.
- The money is left on deposit for one to five years.
- The longer you leave the money in the account, the higher the interest rate paid.
- The interest is tax free.
Prize bonds
- Sold in units of 10 euro.
- No interest is paid.
- Each bond is entered in a weekly prize draw.
- Can be cashed in at any time for the original cost.
Stock markets (Buy shares in a company)
- If you sell the shares, you may make a capital gains profit.
- The company may pay a dividend.
- Capital Gains Tax (CGT) is payable on any profit you earn.
- Income Tax is payable on dividends.
How to open a current account
- Fill in an application form
You must show the following:
*Photo identification
*Proof of address
*Specimen signature
Operating a current account
- Current accounts are used to make day-to-day payments.
- Paypath gives the account holder the advantage to have their money directly lodged into their account.
- The employer does not need to have large amounts of cash on the premises and does not need to take time to fill in cheques for each employee. Plus he / she does not have to take time off work to go to the bank.
Making payments from a current account can be done by:
- Cheque
- Credit transfer
- Bank draft
- Standing order
- Direct debit
Difference between Standing Order and Direct Debit
- Standing order is an instruction to pay a FIXED sum into a bank account at regular intervals.
- Direct debit is the permission given to a company to take money directly from the customer's account and the sum VARIES.
Methods of making payments (those ones above are only current account methods):
- Cash
- Credit card
- Charge card
- Debit card
- Store card
- Postal money order
- Traveller's cheques
Factors to consider when choosing a method of payment
- The cost to you and the recipient
- Security: Will your payment be safe from theft until the right person cashes it?
- Convenience to you and to the payee
Terms
Payee - The person receiving payment. Their name follows the word 'Pay' on the cheque.
Drawer - The person writing the cheque.
Drawee - The bank on which the cheque is drawn.
Negotiating a cheque - Bringing the cheque to a bank to get money for it.
Stale cheque - A cheque presented to the bank more than six months after it was written. The bank will not accept it.
Blank cheque - A signed cheque which has at least one piece of information left out.
Endorsed cheque - The payee has signed the back of the cheque so someone else can negotiate it.
Post-dated cheque - A cheque with a date in the future on it. It cannot be negotiated before that date.
Receipt cheque - A cheque that must be signed by the payee before it can be negotiated.
Dishonoured cheque - The drawee bank has refused to pay out on the cheque. Perhaps the drawer doesn't have enough money in their account.
Stopped cheque - The drawer has instructed the bank to dishonour the cheque.
Crossed cheque - Two parallel lines on the face of the cheque means the cheque must be paid into a bank account. Further instructions may be written between the lines. A cheque is crossed to make it as safe as possible (A/C Payee only must be written in between these parallel lines to make it as safe as possible).
Open cheque - A cheque that is not crossed.