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This report has been produced as evidence for Unit 9 - 'Financial Services' - as part of a Vocational A' level in Business Studies.

Extracts from this document...

Introduction

Financial Services Terms of Reference This report has been produced as evidence for Unit 9 - 'Financial Services' - as part of a Vocational A' level in Business Studies. To: Peter From: Andrew Braganca Subject: Unit 14 Financial services Date: Synopsis: This report breaks down and examines the financial services needed; I will be looking at three different customers types of financial needs. 1.0 I will look and analyse the financial needs of the following customers: * A- Jamie McPherson, first-time home buyer * B- Paul and Anna Day, a couple with children * C- TBI engineering, a business customer 2.0 Case study A I will now look at the personal customers, the first customer I will look at Jamie McPherson the financial need are the following: * Mortgage * Insurance * Bank account * Credit card * Shares * Saving * Pension I will now look at the following mortgages available. 2.1 There are two main types of mortgage - interest only and repayment - and there are advantages and disadvantages in each one. It is advisable to research the subject carefully and seek appropriate financial advice before deciding which policy you prefer. A mortgage is a long-term commitment - often 25 years or more - so get the right mortgage to suit you. It can save thousands. Interest-only mortgages allow you pay the interest due to your mortgage lender every month. You also invest separately in a policy that is designed to pay off the mortgage as it matures, an ISA, pension or endowment. As with any investment, there is some investment risk in that the final payout could be lower than expected. With repayment mortgages, there is no such risk. Here you pay off the interest and the capital over the life of the mortgage - it guarantees that you will have paid off the mortgage by the end of its term. ...read more.

Middle

and others investing in the UK, Europe or the US are usually medium-risk. Their returns are expected to be lower but more consistent from year to year. Low-risk funds reduce the chance that you will lose money. Usually they have a substantial proportion invested in bonds or property. Others invest in the money markets, which mean they are effectively high-interest bank accounts. Choose whichever option feels most comfortable and don't be talked into investing in a high-risk fund if you can't afford to lose your capital - you might regret it later Fund Performance Figures while performance is not the only factor you should consider when you purchase a mutual fund, fund performance figures are constantly quoted in the press, in fund advertising, and fund reports. Two of the most commonly used fund performance terms within the mutual fund arena are yield and total return. Current Yield Current yield is quoted in any advertising and shareholder reports. It's a rather complex formula mandated by the Securities and Exchange Commission (SEC) which is why many people refer to it as SEC yield. Basically, the SEC "standardized" yield uses a fund's net income over the preceding 30 days to project an annualized yield - in theory, what you'd earn if you stayed in the fund for the next twelve months and it kept paying out at the same rate.1 Although that's not a very likely scenario, SEC yield does give you a yardstick for comparing the results of different funds from different fund companies. Total Return Total return, because it combines both income and capital appreciation (or depreciation), is widely considered the best measure of whether you've made or lost money. Compared to yield, total return is a more comprehensive calculation. It takes into account any income or capital gains distributions you've earned, as well as any change in the value of your fund's shares. Calculating the total return on your account is easy. ...read more.

Conclusion

Other incentives might include free overdrafts and no bank charges. While you might not find it convenient to move your business account to a new bank, you might want to switch some of your personal banking to a pure-play Internet bank offering top dollar on your savings account or keen interest rates and loyalty points on your credit card. But you will also need to check out how easy it to access your cash. With Internet-only banks you can generally transfer money to a nominated account at another bank - then you wait three business days before you can pocket it. You can accelerate the process by using CHAPS (the Clearing House Automated Payment System) but there will be an extra charge. You can also use their credit cards and debit cards to withdraw cash from machines, but check out the charges. Smile offers paying-in and cash withdrawals at Post Offices. Are there any set-up charges Some banks such as Barclays (at time of writing) charge a set-up fee and even an annual per-user charge; others are free but may charge for added-value services. Competitive interest rates, low bank charges, user-friendly Web sites and a strong product portfolio are more significant considerations. What about security? Although there have been a few highly publicised online security lapses, mainly caused by teething troubles, there's nobody more conscious of the need for plugging all the online security holes than the banks. Banks use the strongest encryption and multilevel passwords to protect personal data. Your Internet bank should be a member of the UK's Deposit Protection Scheme (or the national equivalent if your bank's parent company is not UK-based). The scheme protects your money if the bank runs into problems. But also check how long it takes to get funds back in the event of a security breach and what red tape you might have to negotiate. Summery of appropriate current legislation and the regulatory bodies ?? ?? ?? ?? Andrew Braganca Unit 14 - 1 - ...read more.

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