Essay
Financial Services for Individuals M2 UNIT 1
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- Institution
Explain the distinctive features of two selected savings, investment and other financial services that render them suitable for two contrasting customers.
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By: sidrit1998 • 6 year ago
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I will be explaining the distinctive features of two selected savings, investment and other financialservices that render them suitable for two customers which will be a student who has recently
moved to the UK and a married couple who want to move from their two bedroom flat into their first
house and they need a large second hand car.
Married couple who want to move in their first house and need a larger second hand car
The couple could use the online bonus saver account to saver for their new house deposit and
second hand car, the account can only be managed online, and this benefits the couple because they
will not need to leave their house to manage their account information. They will earn 0.25% AER
which will allow their account to grow in order for them to have more money for their second hand
car and new house deposit, they can still withdraw their money for emergencies and this will not
affect their AER interest as they will still gain 10%.However if they do not make any withdrawals they
will gain a bonus interest, which may make the couple save more. This account will allow the couple
to save money on the go , not only are they just saving , they will also make interest and they will be
able to buy their car and house soon, this is better than borrowing as they are saving and using their
own money and they do not have to pay anyone back.
The ISA called help to buy will allow the couple to buy their home. The couple can save up to £200
per month and there is no tax on the interest they receive which means they will earn more which
can be added to the deposit for their house. They will have immediate access to the money when
they need it. The money is saved in an account especially for the house and the bonuses they receive
may prevent the couple from spending the savings. Some banks have a connection to the UK
government where the couple will be able to receive a bonus of 25% on their saved balance which
may influence the couple to save more and the maximum they can receive is £3,000 and this is a
good amount which they can use to buy their second hand car. They will receive up to 2% AER on
balances up to £12,000 and that interest can be added to the savings for their house and car. They
will be able to buy the car if they save a lot and receive £3,000 from the government which is good
for the couple.
The fixed term bond will allow the couple to invest money, which they will gain interest on , they will
be able to use the money gained for their house and car, as it is a fixed term bond they will not lose
money like other investments and they will definitely gain money, they can invest up to £2 million
pounds, if they are not in a rush to buy their new house they can save for the total amount of the car
and house , however that will take long, which is why it is better to just save for the deposit and the
car which will take less time if they do not spend the money. In the first year they will receive 0.60%
interest in the first year of their investment 0.75% in the second year and 1.20% in the third year.
There are no withdrawals and this will benefit the couple as they will not be able to spend the money
which means they will be able to save the money needed quickly. In order to use this investment
account the couple will need a deposit of £500 which they may have as the wife has returned to
work and this good because they will money to start with. The interest they receive will also be
added to the money for the decoration of their new house.
This investment ISA will benefit the couple as they will be able to invest money to use for their house
and car. They will pay no income tax and capital gains tax which means they will have more money to
save. The couple can invest up to £15,240 and interest will be earned on over £1000, there is online
banking where they will be able to view their account online and manage it, they will also be able to
add more money to the investment. There is not a certain amount needed for this investment
however it is good to start with a small amount as it is not certain the money will increase, the
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