Investing Fundamentals Quiz

A type of savings plan offering tax advantages. Deductible contributions reduce your current tax bill. Investments grow tax-deferred and you only pay tax when you withdraw in retirement.

A type of savings plan allowing tax-free growth and withdrawals. Contributions are not tax deductible.

The difference in the amount of tax you owe based on your income level (higher earners pay more).

The use of your RRSP contribution tax refund to further grow your wealth.

A government program that matches your RRSP contributions, increasing your retirement savings.

A type of investment that represents a basket of securities.

This strategy involves converting Canadian dollars into US dollars for investment purposes.

A tax deducted by the US government on dividends earned from US-based investments.

Mutual funds are not tax-efficient because they pass on the tax burden for interest, dividends, and capital gains to unit holders every year.

Mutual funds often buy and sell investments (turn over) frequently to chase the "next great stock." This generates capital gains.

ETFs are a modern investment vehicle that allows investors to pool their money in a fund for diversification.

ETFs trade on stock exchanges, making buying and selling shares similar to trading stocks.

Unlike mutual funds, ETFs have minimal upfront charges and do not charge loads, but they may have MERs.

ETFs usually have low turnover rates, holding stocks/bonds for longer periods, minimizing capital gains.

ETFs are generally more tax-efficient than mutual funds because of their low turnover and direct investor-to-investor trading.

Both ETFs and Mutual Funds offer ways to invest in diversified portfolios of stocks or bonds - they are different vehicles for the same concept.

An investing approach that requires active management and decision-making by an investor or portfolio manager, aiming to outperform market returns and take advantage of short-term price fluctuations.

A strategy that seeks to consistently outperform market returns by actively selecting and trading securities based on analysis, research, and market timing.

A type of investment fund that is actively managed by a team of professionals who make buy and sell decisions for the fund's portfolio.

An investing approach that focuses on long-term growth by holding a diversified portfolio of assets, minimizing trading, and keeping costs low.

A type of investment fund that tracks a specific market index, such as the S&P 500, buying and holding the same securities in the same proportions as the index.

A list of stocks that represent a specific segment of the market, often based on market capitalization, industry, or geographic location.

A type of investment fund that offers similar characteristics to a mutual fund, but is traded on an exchange like a stock, allowing for greater flexibility and transparency.

A type of investment fund that allows investors to own a diversified portfolio of securities in a single basket, providing instant exposure to a particular market segment or asset class.

Investment advisors can help with:

1. Asset Allocation: Choosing the right mix of stocks, bonds, and other assets.
2. Withdrawal Strategy: Planning how and when to take money out of your investments.
3. Tax Efficiency: Minimizing your tax burden on your investments.
4. Product Allocation: Choosing the best investment vehicles like ETFs, mutual funds, etc.
5. Goal Setting and Planning: Helping you define your financial goals and create a plan to reach them.

The process of deciding how to distribute your investment money among different asset classes like stocks, bonds, real estate, etc. It's about balancing risk and reward.

A strategy for taking money out of your investments, including when and how much to withdraw. It's key for retirement planning.

Investing in a way that minimizes your tax bill, using strategies like tax-advantaged accounts or efficient investment choices.

Choosing the right type of investment products, like ETFs (exchange-traded funds) or mutual funds. They each have different features and costs.

A company that invests in and owns real estate, offering investors a way to participate in the real estate market without directly buying property.

Investing a fixed amount of money regularly over time, regardless of the market's ups and downs. This helps average out the cost of your investments and reduces risk.

A type of investment that pays dividends, but does not withhold income tax on dividends paid to investments held inside an RRSP.

A US investment that pays dividends and withholds 15% income tax on dividends paid to investments held inside a TFSA.

A type of ETF domiciled in Canada that invests in US stocks. It is subject to a 15% withholding tax on dividends even if held in an RRSP.

The rate of return on an investment over a period of time, often expressed as an annualized percentage.

A type of ETF that hedges against foreign exchange fluctuations, typically with a higher MER.

Physical currency issued by governments and monitored by central authorities, with an unlimited supply and restricted by borders.

Digital currency generated by computers, decentralized, with a limited supply and unseizable.

The act of intentionally concealing income or assets to avoid paying taxes.

The percentage of your retirement portfolio you withdraw each year to cover your expenses.

A withdrawal rate that aims to maintain your retirement savings for a long time, potentially allowing you to leave a legacy for your heirs.

A withdrawal rate that increases the risk of running out of money before you die, but allows for higher spending in retirement.

A strategy that considers various factors like inflation, taxes, and investment returns, to create a realistic retirement plan.

Adjusting your retirement plan regularly to reflect changes in your life, financial situation, and economic conditions.

The ability to adapt your retirement plan based on different scenarios, like market fluctuations or unexpected expenses.

The balance between enjoying your retirement years and ensuring you have enough savings for future generations.