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Personal Budget Suggestion
As my personal budget table is shown, my total income is all from my parents’ contribution per month. I have not done a part-time job. I should consider to find a part-time job and earn some money to reduce the pressure of my parents. Every month I can save some money. In the Future, I could save a lot of money when I get weekly wage from my pat-time job. Therefore, I am able to do a low risk tolerance saving product to earn more interests from banks. I rented a small house that is far from school and charges cheaper rent fee with some friends. It is not convenient for me in term of traffic by walking or taking school bus. In the next chance, I can increase a little bit of rent expenditure for renting a nearer home. In 2014, I have not bought any books because of expensive prices. However, this attitude is not good for studying. Therefore, I decide to expend expenditure on buying books. Every week I will go shopping with friends. I hope that I can reduce the frequency and cut the cost on eating out and buying clothes.
Savings Case Study
Mr Rutherford is a 50 years old man as company executive. His age is a bit high that he faces to get sick and lose job anytime. His earning is quiet high about £150000. Therefore, he can make regular savings of £200 per month.
The client is looking for a low risk savings product where his capital is safe and the rate is a bit higher that it can gives more returns to Mr Rutherford.
The condition of investment market is not optimistic. According to This is Money Internet, latest inflation figures raised up to 1.3 per cent. However, the prospect of interest rates still hold unchangeable at present (Lambert, S., 2014).
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Markets and economists have put off expectations of interest rate that it has a first increasing tendency by 0.5 per cent in late 2015 on account of being concerned to “lowflation”. In developed countries, the forecast which is given by the economists will not come true if inflation happens suddenly and continuously (Lambert, S., 2014).
Andrew Haldane, who is the chief economist of the Bank of England, emphasized that the interest rate will rise up gradually in the next year. Moreover, according to a interview with Gavin Thompson, worked in the Bristol Post, the figure of interest rates has sustained around 3 per cent for many years (Lambert, S., 2014).
Howard Archer, who works as a chief UK economist, analysts the HIS Global Insight. He said that the Bank of England will not increase interest rates before late 2015, though MPC minutes are impossible to decrease expectations on interest rates tremendously in the November. However, it is probability that interest rate tend to go up slightly around August (Lambert, S., 2014).
These are shown that interest rates are still around 3 per cent before late 2015 and they will go up in the future. Nowadays, market is not good for saving. Because rates of many banks can keep still at 3 per cent and saving is low tolerance, Mr Rutherford could do a saving product and prepare for the next year (Lambert, S., 2014).
Financial websites is suggested to consult for Mr Rutherford, such as Moneysavingexpert.com and Thisismoney.co.uk. If Mr Rutherford is not able to meet his saving payments, he could buy products of payment protection insurance as consumer protection.
According to Money saving expert Internet, the TSB classic Plus current saving account is chosen as it has one of the top interest rates comparing with other products. This account offers 5per cent AER up to £2000. Arranged overdraft cost is up to £100 fee free with 19,94% EAR plus £6 per month fee. Unarranged overdraft fees is £10 buffer with £5 per day under £25, £10 per day for more than £25 (max £80 per month) or £10 unpaid item fees (max 3 per day). It needs to pay in £500 per month and register for online banking with paperless statements (Lewis, M., n.d.). Under this product, Mr Rutherford put and keep £2000 in the account as Calendar month. The future value is £3591.7 after one year and £2873.36 after taxation.
Loan Case Study
Mr Hoy consider to buy a second hand Fiat 500 about £4000. He looks for a car financing product for it over 2 years period. The product needs to pay 20 per cent taxation.
The client is looking for a product which has low risk tolerance, low APR representative rate and low total amount payable. The product could be good for Mr Hoy to buy a second hand car as paying less money and spending less time.
Since the Bank of England reduced its Bank Rate by only 0.5 per cent, mortgage and savings rates have reached the lowest point for more than five years. In the bank’ quarterly inflation investigation on Wednesday, the economists and observers have given the surprising forecast that inflation will be possible to fall even much lower, then will stay there for a longer period (Pollock, I., 2014).
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Due to lower interest rates, it puts more borrowing benefits in the hands of consumers so that borrowing markets turns to control by consumers (Roos, D., n.d.). Because interest rates are so low, it is indicated that savings accounts of consumers will not earn more benefits in a bank. Therefore, consumers could use them to fund into financial products or make contribution into the cost of the car rather than keeping your savings and mortgages at a lower interest rate (“What’s the best way to finance buying a car?”, n.d.).
For Mr Hoy, financial websites are considered to consult, for example, Lovemoney.com, Moneysupermarket.com, Comparethemarket.com and Moneyfacts.co.uk.
For Consumer Protection, Mr Hoy could buy a payment protection insurance product. Mr Hoy has the potential risk to loss money when he goes sick lose his job and does not have enough to pay for loan. Payment Protection Insurance aims to help Mr Hoy keeping away from fine charges by paying his loan. Insurers apply to much cheaper PPI than lenders. For Mr Hoy, it is worth making a good decision and buying a PPI by comparing with many products of different companies (“What is Payment Protection Insurance”, n.d.).
The Credit Plus Product is suggested to consider for Mr Hoy. Comparing with other products, this has the lowest Assumed borrowing of £4,000.00 over 2 years at an annual rate of 4.9% based on a representative rate of 4.9% APR (fixed). Therefore, the 24 monthly repayments is £175.12 and total amount repayable is £4,202.88. This product apply to have a current account with CreditPlus because it is just available to current CreditPlus customers . The age of consumers must between 18 and 75. What’s more, consumers will not be charged a fee if they repay this loan and repayment holidays are available with this loan (“Loans Centre”, n.d.).
Lambert, S. (2014). When will interest rates rise? Economists tip no move until late 2015, as ‘lowflation’ concerns dominate. Retrieved from http://www.thisismoney.co.uk/money/news/article-1607881/When-UK-rates-rise.html#ixzz3KC9m1tpd
Lewis, M. (n.d.). Best Bank Accounts. Retrieved from http://www.moneysavingexpert.com/banking/compare-best-bank-accounts#lloyds
Loans Centre. (n.d.). Retrieved from https://www.lovemoney.com/loans#/?amount=4000&timeQty=2&timeUnit=years&scenario=scenario1&predicate=Default&reverse=false&page=1&shortTerm=false
Pollock, I. (2014). Will mortgage and savings rates fall even further?. Retrieved from http://www.bbc.co.uk/news/business-30052201
Roos, D. (n.d.). How Interest Rates Work. Retrieved from http://money.howstuffworks.com/interest-rate4.htm
What is Payment Protection Insurance (PPI). (n.d.). Retrieved from http://www.moneysupermarket.com/c/loans/payment-protection-insurance/guide/
What’s the best way to finance buying a car?. (n.d.). Retrieved from https://www.moneyadviceservice.org.uk/en/articles/whats-the-best-way-to-finance-buying-a-car
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