Savings Accounts
What is interest?
Extra money earned on the money in a savings account.
What does owning a share in a company mean?
You own a small part of that company.
What is superannuation commonly called?
Super.
What is real estate?
Property consisting of land and buildings.
Name the two main types of savings accounts.
At-call accounts and term deposits.
What does ASX stand for?
Australian Securities Exchange.
What is the main purpose of superannuation?
To help people save for retirement.
What is a capital gain?
When an investment is sold for more than its original purchase price.
Which type of account usually lets you access your money straight away?
An at-call savings account.
What are dividends?
Payments a company may make to its shareholders from its profits.
Who generally pays compulsory super contributions into an eligible employee's super fund?
Their employer.
What is diversification?
Spreading investments across different investment categories to reduce risk.
What is compound interest?
Earning interest on your original savings and on the interest already earned.
Name the two main ways investors can make money from shares.
Dividends and capital growth (selling shares for more than they paid).
Why does super help reduce reliance on the Age Pension?
It builds retirement savings that people can use to support themselves when they stop working.
What is an investment portfolio?
The collection of investments owned by a person or business.
Give two things a person should consider when choosing a savings account, apart from the interest rate.
Whether they need easy access to their money and the account fees. Minimum balance requirements are also relevant.
A share costs $20. You buy it and later sell it for $27. What is your capital gain per share?
$7 per share, before any fees or tax.
Explain how starting to build super earlier can benefit someone in retirement.
Contributions have more time to be invested and potentially grow through investment returns and compounding.
An investor puts all their money into one company's shares. Explain how diversification could reduce their risk.
They could spread their money across different assets, such as savings, shares and property. If one investment performs badly, the others may help reduce the overall impact.