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Questions and Answers
What is the fifth foundation?
What is the fifth foundation?
build wealth and give
A security that represents part ownership of a company is called a(n)...
A security that represents part ownership of a company is called a(n)...
stock
When you invest in a mutual fund, your money is invested in a mix of...
When you invest in a mutual fund, your money is invested in a mix of...
stocks, bonds, and money market accounts
Diversification reduces your _________ by using a mix of investment types in your portfolio.
Diversification reduces your _________ by using a mix of investment types in your portfolio.
___________ is the process of figuring out how much money you'll need in retirement and creating a plan to get there.
___________ is the process of figuring out how much money you'll need in retirement and creating a plan to get there.
____________ is the cure for ___________.
____________ is the cure for ___________.
Investing your money earns you more money because of...
Investing your money earns you more money because of...
Before you invest, you should make sure a mutual fund has done well for 5-10 years.
Before you invest, you should make sure a mutual fund has done well for 5-10 years.
When riding the highs and lows of the stock market, remember...
When riding the highs and lows of the stock market, remember...
Roth IRA, 401(k), 403(b), 457, and Simplified Employee Pension are all examples of ______________.
Roth IRA, 401(k), 403(b), 457, and Simplified Employee Pension are all examples of ______________.
Social security benefits are meant to ______ your income.
Social security benefits are meant to ______ your income.
When you invest, your goal is to earn a negative rate of return on investment.
When you invest, your goal is to earn a negative rate of return on investment.
Certificates of deposit and money market accounts are both examples of investments with ________ risk and ____________ return.
Certificates of deposit and money market accounts are both examples of investments with ________ risk and ____________ return.
It's okay to borrow money from your retirement account, but don't borrow money to invest in it.
It's okay to borrow money from your retirement account, but don't borrow money to invest in it.
You should wait to be generous until you have money to give.
You should wait to be generous until you have money to give.
Live like no one else now, so later you can live and _______ like no one else.
Live like no one else now, so later you can live and _______ like no one else.
Mutual funds are less risky and can outperform the stock market because...
Mutual funds are less risky and can outperform the stock market because...
Never _______ something you don't ________.
Never _______ something you don't ________.
Be aware of any ______ you might receive, but don't bank on it as a key part of your retirement plan.
Be aware of any ______ you might receive, but don't bank on it as a key part of your retirement plan.
The three components of compound growth are money, time, and __________.
The three components of compound growth are money, time, and __________.
Never invest your money in ______ because it/they are extremely risky.
Never invest your money in ______ because it/they are extremely risky.
_________ is key when it comes to compound growth.
_________ is key when it comes to compound growth.
When you're retired, you'll still have to pay taxes.
When you're retired, you'll still have to pay taxes.
When donating money, you should always...
When donating money, you should always...
Usually, the more liquid an asset is (like cash in the bank), the less return you can expect.
Usually, the more liquid an asset is (like cash in the bank), the less return you can expect.
What does 'bull and bear' reference?
What does 'bull and bear' reference?
When using a Roth plan, you invest your money after paying taxes, and the investment grows tax-free.
When using a Roth plan, you invest your money after paying taxes, and the investment grows tax-free.
Why might someone choose to diversify their investments?
Why might someone choose to diversify their investments?
If you're over the age of ________, you need a will.
If you're over the age of ________, you need a will.
You can build a legacy you'll be proud of by...
You can build a legacy you'll be proud of by...
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Study Notes
Foundations of Wealth Building
- The fifth foundation involves building wealth and giving to others.
Investment Basics
- Stocks represent partial ownership in a company.
- Mutual funds pool money from multiple investors to invest in a mix of stocks, bonds, and money market accounts.
Risk Management
- Diversification minimizes risk by including various investment types in a portfolio.
- Certificates of deposit and money market accounts are categorized as low risk and low return investments.
Retirement Planning
- Retirement planning involves assessing future financial needs and developing a strategy to achieve them.
- Retirement plans include Roth IRA, 401(k), 403(b), 457, and Simplified Employee Pension.
Generosity and Financial Behavior
- Generosity counteracts selfishness and is essential for financial health.
- Keep contributing to charitable causes regardless of current financial limitations.
Investment Strategies
- Compound growth generates wealth over time through reinvestment of earnings.
- Always understand an investment before committing funds; avoid investing in single stocks due to high risk.
Financial Expectations
- Social Security benefits typically replace about 40% of pre-retirement income.
- Anticipate taxes on retirement income.
Financial Wisdom
- Emotional resilience is vital when navigating stock market fluctuations; maintain a long-term perspective.
- Seek to avoid reliance on inherited wealth to strategize retirement plans.
Liquid Assets and Market Dynamics
- Greater liquidity generally means lower expected returns—cash offers security but limited growth.
- "Bull and bear" markets denote stock market performance trends.
Tax Implications and Legacy Building
- Roth plans allow for tax-free growth after taxes have been paid on contributions.
- Creating a lasting legacy involves donating time and financial resources to meaningful causes.
Age and Legal Considerations
- Individuals over the age of 18 should establish a will to ensure their wishes are fulfilled.
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