Banks

Money deposits

Money can be 'lent' or deposited in a variety of ways. The essence of this kind of investment is that you get back in cash your original investment intact - on demand, or after giving the required notice, or at the end of an agreed period. Unlike other forms of investment you cannot transfer or sell your holding to somebody else. Thus these investments are sometimes referred to as 'non-marketable', to distinguish them from those dealt with in Chapters 5 and 6, which can be sold on the market.

Straightforward money deposits, repayable on demand, comprise the most liquid assets of all, other than cash itself. Thus a current bank account on which you can draw cheques is so very liquid that the balance earns no interest at all. But an ordinary account at the National Savings Bank is just as liquid for withdrawals up to £50 a time (of course you cannot draw cheques), and you do earn a modest rate of interest on the balance - 5% in 2000. And as the first £70 of interest a year earned on such an account is entirely tax free, this rate is the equivalent of a 7.1% gross rate where tax has to be paid at basic rate. A warning: interest does not start to be earned until the 1st of the month following the date of deposit and any amounts withdrawn do not earn any interest in the month of withdrawal.

• Part Two - Personal Investment
• Costs of Dealing