1 minute read
Key Terms
KEY TERM: Infation
A general increase in prices and fall in the purchasing value of money
Brainstorm 3 places you can keep money, instead of under your mattress:
Why do people have bank accounts?
NEW INVESTMENT KEY TERMS
Current Account:
A type of bank account most people use for day-to-day personal fnances. They’re a secure place to keep money, and allow you to receive money (e.g. a wage from an employer) and transfer money elsewhere (e.g. buying something in a shop).
Savings Account:
An account ofered by banks that is used for money you plan to save longer term. The money in a banking account is insured by the Financial Services Compensation Scheme (FSCS.)
While savings accounts generally ofer a small amount of interest, another option for earning interest on your money is to purchase a bond. Bonds may ofer a higher return and tend to be a safe form of investment for money you are saving long-term.
Bond (Gilt): A low-risk debt investment, similar to an I.O.U., that is issued by companies, governments or states to fund projects. When you purchase a bond, you are lending money to the borrower or “issuer.” In exchange, the issuer pays you a certain amount of interest periodically. When the bond matures (or becomes time to pay), the borrower will pay back the initial investment or the “principal” value of the bond, plus interest.
Government bonds are known as gilts in the UK and are an investment vehicle that provides a fxed rate of return until their expiry.
