Retirement/Estate Planning
The most common retirement benefit is...
Social Security
Name three low risk investments
savings account, certificate of deposit, money market accounts
Monika invests $10,000 into a high yield savings account with an annual interest rate of 10%. Approximately how many years will it take for her money to double?
7.2 years
This refers to a change in purchasing power over time. Money becomes less valuable as years pass because of...
Inflation
Stocks pay ________, and means you _____ part of the company.
dividend, own
ROTH means...
You pay taxes "right now"
contribute after paying taxes
Name three medium risk investments
bonds (government, municipal, and corporate), stocks, Mutual funds
Leilani invested $600 into a stock, and lost $150 after one year. What is her rate of return on this investment?
-25%
(she lost 25% of the money she invested)
If you receive $1,000 a year from now instead of today, you lose...
Potential Earnings/Interest/Dividends
What is the name of a pre-diversified investment with medium risk?
Mutual Fund
The money you contribute to retirement accounts is invested in...
Mutual Funds
Name three high risk investments
options, futures, collectibles
If Ms. Knerr has an interest rate of 9%, about how many times will her money double in 25 years?
3 times
(8 years to double; 25/8 = 3.1)
Compounding Interest means...
You earn interest on interest (as well as the principal amount in an account)
A stock from a company that does well regardless of economic conditions (ex. Apple)
Name two positive outcomes of estate planning
● Provide for loved ones after you are gone
● Strengthen family relationships by giving them a path for them to follow
● Reduce time, effort and costs for survivors
● Leaves a legacy to family, organizations, institutions
The higher the risk, the higher the ________
reward/potential profit
If inflation has increased 53% since 2007, how much would an item that cost $4 in 2007 cost now?
$6.12
When stock prices are generally rising. It is characterized by optimism.
Bull Market
Explain why a futures investment is risky...
You are betting on the stock market (examples: prices of agricultural product)
Who should you consult for estate planning?
a lawyer
This is a strategy for reducing your risk by investing your money in multiple types of investments.
Diversification
If you want your money to double within 4 years, what rate of return would you need?
What kind of investment would be likely to have this kind of return?
18%
Medium-higher risk investments
When stock prices are generally falling. It is characterized by pessimism.
Bear Market
Another name for a U.S. government bond is...
Series EE