Essay
Financial Services for Individuals P5 UNIT 1
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Describe two investment products appropriate to meet the financial needs of two contrasting customers.
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I will describing two investment products appropriate to the financial needs of two contrastingcustomers, which will be an elderly couple who are about to retire from work and a young professional
earning £20,000 but saving for a mortgage on a £150,00 one bedroom flat.
The stockbroker’s investment ISA allows one to invest up to £15,240 and they will pay no income tax and
capital gains tax which means they will save money, this is will benefit the young professional as they are
saving for a mortgage deposit and earning £20,000; while they are working and earning money they
could be investing that money and gaining more which he could use towards their deposit. Interest will
be earned on over £1000 will be earned. There is also online access where the funds can be managed
and money can be added for more investment. This will benefit the young professional as there is not a
certain amount they have to invest, they can invest how much they want and still earn money on it. With
investments there’s not a certain amount you will get back as you can gain or lose. However its good
because a lot can be gained if a lot is invested, its best to start off with a small amount if not sure
especially for the young professional as they just started work.
There is the world selection investment option and the minimum invest is a whole sum of £1000 or £50 a
month and this will benefit the young professional because they do not have to invest a lot because as
they just started work they may not have as much money. While investing this small amount it could turn
into a large amount, that is the amount advised to start investing with however up to £15,240 can be
invested, the young professional may receive an amount which they can use for the deposit if not
enough they could always invest that money again. The investment can also be withdrawn or topped up.
The young professional will be able to have their house soon depending on how much they deposit and
if the investment goes well. Research can be accessed which will allow the young professional to gain
information about the market changing, which will let them know if they want to invest or withdraw
their investment and this can allow them to receive an high investment because they know the research
and used the online tools and they will be able to raise money for the deposit due to this and have their
new house soon. Also with this investment money can increase or decrease , which is why investments
are a risk.
The fixed term bond will benefit the elderly couple about to retire from work, as they are retiring they
will need money to survive on as they are not getting a constant pay, also they will be able to invest the
money for a fixed term because they are elderly and they will not be doing as much. They could use the
money they receive to move into a new house or buy a car to get around or if they have children they
could save it for them. They can invest up to £2 million however they will need to have £500 to deposit.
They will receive 0.60% interest on their investment in the first year, 0.75% in the second year and 1.20%
interest in the third year. The interest will be paid monthly; the elderly couple can use the additional
money for anything they need. There are no withdrawals which is good as it stops the elderly couple
from unnecessary spending. This is good because they will certainly gain more than they invested rather
than receiving less than they invested.
General investment ISA will allow the elderly couples investment to grow and they will not have to pay
tax and the money they receive. Each type of funds to invest in has a different level of risk and the
potential return. A £100 can be invested a month as the starting sum or the annual investment cost will
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