1. You have just received a once in a lifetime offer Alan Sugar has offered you a salary of £100,000 per annum for you to complete your dream job Look at your personal profile sheet and answer all the questions

2. LESSON 15: Choosing to save TO KNOW: TO KNOW: – Reasons why people save and methods of saving TO UNDERSTAND: TO UNDERSTAND: – the different methods of saving TO DO: TO DO: – Investigate the rewards and risks of different methods of savings

3. You are in a position to save when... Your net income (after tax and all other deductions) is higher than your regular outgoings

4. Where can you save? High street banks Building societies National Savings and Investment (government) Post Office car account – for pensioners or receiving benefits

5. Learning against the clock – 5 minutes per investigation You will be given one of FOUR envelopes In this envelope will be information on one method of saving You must carefully read through the information in your groups and then fill in the relevant table in your booklet Some of this information is quite complicated but don’t worry... Ask me about any information you don’t understand

6. 1. Cash ISAs A savings account on which interest payments are tax free If you are a UK taxpayer, you usually have to pay tax on interest earned from your savings in line with your usual rate – so you stand to lose 20% or 40% of your return. However, cash Isas (Individual Savings Accounts) allow you to earn tax-free interest. This means that, for most people, they are a sensible place to start when looking for a home for your savings.cash Isas You have instant access to your savings unless notice of withdrawal is required and it is a low risk way of saving your income. There’s a limit to how much you can put in a cash Isa each year – currently set at £5,640 for the 2011/2012 tax year. Once you’ve used this up, you will need to opt for another type of account if you want to continue saving.

7. 2. Instant access savings accounts Instant access savings accounts do what they say on the tin: they allow you to withdraw your money quickly and easily. Some instant access accounts come with a plastic card that can be used to take out money from cash machines, some offer over-the-counter withdrawals and many allow you to transfer money out of your account online, penalty-free. Instant access savings accounts Saving in an instant access account makes sense if you think you might need to withdraw some of the cash you’ve put aside. ‘Emergency savings’ should be kept in an easy access account so you won’t struggle to get at them in a crisis. It’s worth remembering that some instant access accounts offer more immediate withdrawals than others; if you’re with an online-only bank or are operating your account by phone, it’s possible that any withdrawals or transfers you make might take a few days to go through. Instant access accounts may also limit the number of withdrawals you can make each year without losing interest, so remember to check. Although many instant access accounts offer customers an introductory ‘bonus’ interest rate that might be fixed for 12 months, instant access accounts are typically variable rate deals. This means that, after any introductory bonus you get expires, the rate payable on your cash may drop. It’s important to keep a close eye on the return your instant access savings are earning, and switch to a new Best Rate savings account if necessary.Best Rate savings account

8. 3. Notice savings accounts Notice savings accounts work in a different way to instant access deals. Notice savings accounts Instead of having quick access to your money when it suits you, saving in a notice account means you’ll have to tell your provider in advance that you want to make a withdrawal. Some notice accounts demand that you let them know you intend to withdraw money 30, 60 or 90 days ahead – so these accounts are unlikely to suit you if you may need to get at your savings unexpectedly. If you do make an emergency withdrawal from a notice savings account, you’re likely to lose some interest. In the past, notice accounts have offered higher interest rates than instant access deals – but this is no longer always the case. Therefore, before opening a notice account, it’s worth checking to see whether you could get the same return on your money without restricting your access to it.

9. 4. National Savings and Investment Banks and building societies are private organisations. When you save with a bank or building society, your money is usually reinvested to make a profit, which is then shared between the organisation's shareholders and/or members. NS&I is a government department offering savings and investments to the general public. It is not like saving with a bank or building society. Instead, you are lending money to the government to finance public spending. In return, the government pays interest, stock market linked returns or prizes for Premium Bonds. A bond is like an IOU from the government. You would issue an amount of money to the government and they will pay you a fixed-rate of interest every year and at the end of the term they pay you your money back. Fixed-rate bonds can extend over one year, two years – even three, four or five years. Generally, the longer you’re prepared to lock your cash away for, the higher your return will be. While it may be possible to get your money out of a fixed-rate bond in an emergency, it’s likely you’d stand to pay a hefty interest penalty for doing so. Therefore, tying up your cash in a fixed-rate bond is only a good idea if you’re confident you won’t need to get at it.

10. Learning review AccountReward (L/M/H) Risk (L/M/H) Short-, medium- or long-term savings Ease of withdrawing money ISAs Instant access Notice National Savings and Invetsment Shares and Unit trusts

11. Think back to the first activity... Which savings method would you use to save your money. Explain your answer.

12. LEARNING OUTCOMES “You must/should now be able to...” ALL MUST: ALL MUST: – Describe reasons for savings and methods of saving MOST MUST: MOST MUST: – Explain the rewards and risks of different methods of saving SOME SHOULD: SOME SHOULD: – Begin to evaluate the best method of saving for different people