|
It sometimes feels like the world of finance has a language all to itself.
Well here at Tax Free Junior ISA we explain what all the ISA & Savings Account Terminology actually means.
AER - This stands for Annual Equivalent Rate and shows the actual earnings made of any interest earned and compounds it together for the whole tax year. If you have a current, savings or ISA account that pays interest monthly then you would have to leave all your money in for the year to achieve the full AER rate.
Bank Of England Rate - This is the official rate of interest set out by the Bank Of England’s Monetary Policy Committee which is set out each month. Whilst many bank and savings accounts and Junior ISA’s do not use the same rate for their accounts it is always worth observing and comparing your own rate to that of the Bank Of England’s
Bonds - This simply means ‘Every year’
Child Trust Fund - This was a savings fund set up by the government in which they would give every newborn baby a voucher worth £250 to invest in a Child Trust Fund of choice. Once the child reaches 7 years of age the government would then give another voucher worth £250 to pay into the fund. Any interest earned by the savings fund is free from tax and the money can only be withdrawn when the child is 18 but family / friends can pay into the fund at any time (up to a maximum of £1200 per tax year).
Compounding - This is where you add together your savings and the interest already earned on those savings and then calculating the interest on the total amount.
Fixed Rate - This refers to the rate of interest which is paid on your investment and it stays the same (fixed) from the first day of investment.
Gross PA - This refers to the gross amount of interest earned per annum. Please note that this figure will be the gross amount of interest paid on an account prior to tax being deducted.
IFA - This stands for ‘Independent Financial Advisor’
ISA - This stands for ‘Individual Savings Account’ and is a simple savings account where you do not pay any tax on any interest earned but their are rules to the account.
JISA - Abbreviation for ’Junior Individual Savings Account’
Junior ISA - The same as a regular ISA but this is designed for children and they cannot withdraw any money until they reach adulthood. A Tax Free Junior ISA Savings Account is a great way for parents to save up a nest egg with which to help their child financially later in life such as paying for university or a deposit on their first home.
Interest - This refers to the income you are paid on any savings you have in your account.
Maturity - Some ISA’s and savings accounts run for a fixed period and when that period has come to an end the account is known to have matured.
Monthly Interest - This is the term given when a savings account and Junior ISA pay interest every month.
PA / Per Annum - This simply means ‘Every year’
Shariah Junior ISA - Our Shariah JISA is a Shariah compliant Junior ISA Account which achieves it’s returns inline with the Islamic Investment Guidlines and in accordance with advice from the Shariah advisory board.
Tax Free - Tax free means exactly that. With a Tax Free Junior ISA, any income earned by interest paid on your savings will be free from any taxation including income tax and capitol gains tax.
Variable Rate - This means that the interest rate paid on a savings account can change (increase or decrease) throughout the lifetime of the account.
 |
|
|
