Business Studies · 3rd Year · Personal Finance · Summer Term

Saving and Investing

Explore the reasons for saving money and compare different saving options available from financial institutions. Understand the basic concepts of investing and the relationship between risk and return.

TL;DR:Empower your students with essential life skills by demystifying the world of saving and investing. This topic moves beyond simple budgeting to explore how to make money work for them.

• NCCA Curriculum Specifications
• Junior Cycle Business Studies Specification: Personal Finance Strand, LO 1.4, 1.5

About This Topic

This topic, 'Saving and Investing', is a cornerstone of the 'Economic Awareness' strand within the Junior Cycle Business Studies specification. For third-year students, it builds upon their understanding of personal finance by introducing the crucial concepts of forward-planning and wealth creation. The curriculum requires students to not only identify the reasons for saving but also to critically evaluate the options available to them in the Irish context. This involves a practical comparison of financial institutions they will encounter, such as commercial banks (e.g., AIB, Bank of Ireland), credit unions, and An Post. Teachers should emphasise the distinct ethos of credit unions as member-owned cooperatives versus the profit-driven nature of banks. The introduction to investing should be grounded in the fundamental relationship between risk and return. This is a key financial literacy skill that helps students move beyond simple saving. By exploring this concept, students develop the capacity to make informed financial decisions, understand financial news, and appreciate the long-term implications of different financial strategies. The topic provides an excellent opportunity to link classroom learning to real-life decisions students will soon face, such as saving for college, a car, or other significant life events.

Key Questions

1. Compare the features of saving accounts offered by a commercial bank and a credit union.
2. Explain the principle of 'risk and return' in the context of investing.
3. Evaluate the suitability of different savings options for achieving a specific financial goal, such as buying a new phone.

Learning Objectives

• Compare and contrast the features of savings accounts from different financial institutions, such as commercial banks and credit unions.
• Define key financial terms including interest, DIRT, risk, and return.
• Explain the relationship between risk and return in the context of investing.
• Develop a personal savings plan to achieve a specified short-term financial goal.
• Evaluate the suitability of various savings options for different scenarios.

Key Vocabulary

Interest	The money paid by a financial institution for keeping your money with them (on savings), or the fee charged for borrowing money (on a loan).
DIRT (Deposit Interest Retention Tax)	A tax deducted from the interest earned on savings held in Irish financial institutions.
Credit Union	A non-profit financial cooperative owned and controlled by its members, offering savings and loan services.
Risk	The possibility that an investment will lose money or not provide the expected profit.
Return	The profit or loss generated by an investment, usually expressed as a percentage of the original amount invested.

Watch Out for These Misconceptions

Common Misconception

Saving and investing are the exact same thing.

What to Teach Instead

Saving is putting money aside in a very safe place, like a bank or credit union, for short-term goals. It has very low risk and offers low returns. Investing is using money to buy something that could grow in value over the long term, like shares, but it comes with a higher risk of losing money.

Common Misconception

You need to have loads of money to start investing.

What to Teach Instead

While some investments require a lot of money, many modern options allow people to start investing with small, regular amounts. The principle of starting early is often more important than the amount you start with.

Common Misconception

My money is 100% safe in the bank, no matter what happens.

What to Teach Instead

Money in Irish banks and credit unions is very safe, but it's protected by the Deposit Guarantee Scheme (DGS) up to a limit of €100,000 per person, per institution. This means if the institution fails, your savings up to that amount are protected.

Active Learning Ideas

Four Corners

Bank vs. Credit Union Showdown

In pairs, students research and compare a standard savings account from a major Irish bank and their local credit union. They create a comparison table highlighting interest rates, fees, membership requirements, and online services, then present their findings on which is better for a typical teenager.

45 min·Pairs

Four Corners

The Financial Goal Challenge

Students individually choose a realistic short-term financial goal, like buying a new phone or concert tickets. They must then research and write a one-page savings plan, justifying their choice of savings product (e.g., An Post account, credit union regular saver) to achieve their goal.

60 min·Individual

Four Corners

Risk and Return Ladder

As a whole class, create a 'ladder' on the whiteboard from low risk/low return to high risk/high return. Students are given cards with different investment types (e.g., savings account, government bonds, property, company shares) and must place them on the correct rung of the ladder, justifying their decision.

30 min·Whole Class

Real-World Connections

• Creating a savings plan for a significant future purchase, like a first car or a deposit on a house.
• Understanding how to save for third-level education or apprenticeships.
• Making an informed decision when opening their first bank or credit union account.
• Interpreting news reports about interest rate changes from the European Central Bank (ECB).
• Comparing different mobile phone contracts or other long-term financial commitments.

Assessment Ideas

Exit Ticket

An exit ticket task where students must list one pro and one con for saving with a bank, and one pro and one con for saving with a credit union.

Quick Check

A case study project where students are given a profile of a person with a specific financial goal and must research and recommend a suitable savings or low-risk investment strategy, justifying their choices.

Quick Check

Students use a 'traffic light' system (red, amber, green) to rate their own confidence in defining key vocabulary terms before a topic test.

Frequently Asked Questions

What is DIRT and do I have to pay it?

DIRT stands for Deposit Interest Retention Tax. It's a tax that the bank or credit union automatically takes from the interest you earn on your savings and pays to the Revenue Commissioners on your behalf. Most savers have to pay it.

Is it better to save with my local credit union or a big bank?

It depends on your needs. Credit unions are owned by their members and often have a strong community focus, sometimes offering better rates for loans. Banks are for-profit companies that might offer a wider range of digital services and accounts. It's always best to compare the interest rates, fees, and services for yourself.

Why would anyone choose a risky investment if they could lose money?

People choose riskier investments because they also offer the potential for a much higher return or profit than safer options. The goal is that over a long period, the growth will outweigh any short-term losses. It's about balancing the chance of a greater reward against the risk of a loss.