Podcast
Questions and Answers
Which of the following include long-term investments properly diversified?
Which of the following include long-term investments properly diversified?
- Savings accounts
- International (correct)
- Growth (correct)
- Aggressive growth (correct)
Which of the following is a good investment option?
Which of the following is a good investment option?
- Mutual funds (correct)
- Savings accounts
- Real estate
- Stocks
What is true about liquidity?
What is true about liquidity?
The more liquid an investment, the less return.
Why do people need to save and invest?
Why do people need to save and invest?
If you own stock in Company X, what can you expect to receive?
If you own stock in Company X, what can you expect to receive?
Savings accounts and money-market accounts are most appropriate for?
Savings accounts and money-market accounts are most appropriate for?
What is the benefit of diversification in your investments?
What is the benefit of diversification in your investments?
To ensure that some of your retirement savings will not be subject to income tax upon withdrawal, you would contribute to?
To ensure that some of your retirement savings will not be subject to income tax upon withdrawal, you would contribute to?
What type of fund is a young investor willing to take moderate risk most likely interested in?
What type of fund is a young investor willing to take moderate risk most likely interested in?
What should you do regarding your 401(k) plan regardless of company matching?
What should you do regarding your 401(k) plan regardless of company matching?
What retirement plan is found in nonprofit organizations like churches and hospitals?
What retirement plan is found in nonprofit organizations like churches and hospitals?
Which statement about the stock market is false?
Which statement about the stock market is false?
When buying and selling investments, what should you avoid?
When buying and selling investments, what should you avoid?
What do employee benefits packages include?
What do employee benefits packages include?
What is a savings account sold by an insurance company that provides payments at specified intervals?
What is a savings account sold by an insurance company that provides payments at specified intervals?
Money markets are great for your emergency fund due to their liquidity and stability.
Money markets are great for your emergency fund due to their liquidity and stability.
The last time the United States issued war bonds was during the Vietnam War.
The last time the United States issued war bonds was during the Vietnam War.
A mutual fund portfolio that is properly diversified will have all investment dollars located in just one of four different classes of financial assets.
A mutual fund portfolio that is properly diversified will have all investment dollars located in just one of four different classes of financial assets.
Single stocks and mutual funds carry the same amount of risk.
Single stocks and mutual funds carry the same amount of risk.
You can start investing with a small amount of money.
You can start investing with a small amount of money.
Good investment portfolios are extremely complex.
Good investment portfolios are extremely complex.
You should start investing as soon as you have your college education funded.
You should start investing as soon as you have your college education funded.
If you leave a job and have money saved in your employer's retirement plan, it is wise to roll that money into an IRA.
If you leave a job and have money saved in your employer's retirement plan, it is wise to roll that money into an IRA.
If you get into financial trouble, borrowing against your retirement plan is a good option.
If you get into financial trouble, borrowing against your retirement plan is a good option.
Saving and investing have nothing to do with the amount of money you make.
Saving and investing have nothing to do with the amount of money you make.
What quality permits an asset to be converted quickly into cash without loss of value?
What quality permits an asset to be converted quickly into cash without loss of value?
What describes the relationship of substantial reward compared to the amount of risk taken?
What describes the relationship of substantial reward compared to the amount of risk taken?
What is a list of your investments called?
What is a list of your investments called?
What is a piece of ownership in a company or mutual fund referred to as?
What is a piece of ownership in a company or mutual fund referred to as?
What are securities that represent part ownership or equity in a corporation?
What are securities that represent part ownership or equity in a corporation?
What is the money invested within a retirement plan that is either tax deferred or tax free called?
What is the money invested within a retirement plan that is either tax deferred or tax free called?
What is the government agency responsible for regulating the stock market?
What is the government agency responsible for regulating the stock market?
Which federal agency is responsible for collecting taxes and enforcing tax codes?
Which federal agency is responsible for collecting taxes and enforcing tax codes?
What is distribution of a portion of a company's earnings to its shareholders called?
What is distribution of a portion of a company's earnings to its shareholders called?
What is a savings plan designed to help families set aside funds for future college costs?
What is a savings plan designed to help families set aside funds for future college costs?
Flashcards
Long-term Investments
Long-term Investments
Investments diversified across growth, income, international, and aggressive growth mutual funds.
Mutual Funds
Mutual Funds
A suitable investment choice for achieving diverse financial objectives.
Liquidity vs. Return
Liquidity vs. Return
As liquidity increases, potential return typically decreases and Vice Versa.
Saving and Investing
Saving and Investing
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Dividend
Dividend
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Savings/Money Market Accounts
Savings/Money Market Accounts
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Diversification
Diversification
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Roth IRA Contributions
Roth IRA Contributions
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Young Investor's Goal
Young Investor's Goal
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401(k) Contribution
401(k) Contribution
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403(b) Plan
403(b) Plan
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Consistent Investment Approach
Consistent Investment Approach
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Employee Benefits
Employee Benefits
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Annuity
Annuity
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Money Market Accounts
Money Market Accounts
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Mutual Fund Diversification
Mutual Fund Diversification
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Risk of Single Stocks
Risk of Single Stocks
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Investment Accessibility
Investment Accessibility
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Good Investment Portfolio
Good Investment Portfolio
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Direct Rollover to IRA
Direct Rollover to IRA
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Liquidity
Liquidity
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Risk-return Ratio
Risk-return Ratio
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Portfolio
Portfolio
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Share
Share
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Tax-favored Dollars
Tax-favored Dollars
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Dividend
Dividend
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529 Plan
529 Plan
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Study Notes
Long-term Investments
- Properly diversified long-term investments include growth, growth and income, international, and aggressive growth mutual funds.
Good Investment Options
- Mutual funds are considered a good investment option for various financial goals.
Liquidity of Investments
- There is an inverse relationship between the liquidity of an investment and its potential return; more liquid investments tend to yield lower returns.
Importance of Saving and Investing
- Savings and investments enable money to generate additional income over time.
Dividends
- Shareholders of Company X can expect to receive dividends when the board of directors decides to issue earnings.
Savings Accounts Usage
- Savings accounts and money-market accounts are best suited for emergency funds and short-term financial goals.
Diversification Benefits
- Diversification of investments helps reduce risk by spreading investment dollars across various assets.
Tax Treatments on Withdrawals
- Contributions to a Roth IRA ensure that some retirement savings remain tax-free upon withdrawal.
Young Investor Preferences
- A young investor with a moderate risk tolerance seeks mutual funds for potential above-average growth.
401(k) Plans
- It's advisable to contribute to a 401(k) plan regardless of employer matching since many employers offer contribution matches.
403(b) Retirement Plans
- A 403(b) plan serves as a retirement option for employees in nonprofit organizations like schools and hospitals.
Stock Market Misconceptions
- A false statement about the stock market is that the NYSE, formed in 1792, is the smallest organized exchange in the U.S.
Investment Strategy Consistency
- Investors should avoid frequently changing strategies based on market trends, maintaining a consistent approach is key.
Employee Benefits
- Employee benefits packages provide non-wage compensations in addition to salaries.
Annuities
- An annuity is a savings account from an insurance company that makes periodic payments after retirement.
Money Market Accounts
- Money market accounts are highly recommended for emergency funds due to their liquidity and stability.
War Bonds Issuance
- The statement regarding the last issuance of war bonds in the Vietnam War is false; they have been issued more recently.
Misconceptions About Mutual Funds
- A properly diversified mutual fund does not place all investment dollars into a single class of financial assets.
Risk Assessment
- Single stocks carry higher risk compared to mutual funds, which are generally less risky.
Investment Accessibility
- Individuals can initiate investments with small amounts of money, making it accessible to a broader audience.
Investment Portfolio Complexity
- Good investment portfolios are not necessarily complex; simplicity can often lead to better investment outcomes.
Timing for Investment
- It is advisable to start investing soon after securing funding for college education.
Retirement Plan Transfers
- Always opt for a direct rollover into an IRA when leaving a job to avoid taxes and penalties on retirement savings.
Borrowing Against Retirement Plans
- Borrowing from a retirement plan during financial distress is not recommended.
Saving and Earning Correlation
- Saving and investing are not solely dependent on income levels; anyone can participate regardless of earnings.
Definitions
- Liquidity: The quality that allows quick conversion of assets into cash without sacrificing value.
- Risk-return Ratio: This indicates the relationship between expected rewards and the risks taken in investments.
- Portfolio: A comprehensive list of an individual’s investments.
- Share: Represents ownership in a company or mutual fund.
- Stocks: Securities that denote partial ownership in a corporation.
- Tax-favored Dollars: Money invested under favorable tax conditions in retirement accounts.
- Securities Exchange Commission: The federal agency responsible for stock market regulation.
- Internal Revenue Service: Agency tasked with tax collection and enforcement of tax laws.
- Dividend: A distribution of earnings to shareholders determined by the board of directors.
- 529 Plan: A state-operated savings plan assisting families in funding future college expenses.
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