Investing 101
Types of Investments
Mutual Funds & Qualified Plans
Employer Benefits
Investing & Retirement
Vocabulary
100
The fifth foundation in Foundations in Personal Finance
What is "Build Wealth & Give"?
100
A small piece of ownership in a company; as the value of the company goes up, it pays dividends (profit) to investors. This type of investment carries extremely high risk.
What are single stocks?
100
A qualified plan is a ________-_________ investment (which means it has special tax treatment. Examples include: IRA & Roth IRA.
What is tax-favored?
100
A self-employed person may deduct up to 15% of their net profit on the business by investing in a _____.
What is Simplified Employee Pension Pan (SEP)?
100
The benefit of diversification in your investments is:
A) Reduced risk
B) Increased return
C) Increased return
D) Increased risk
What is A) Reduced risk?
100
Relationship of substantial reward compared to the risk taken.
What is risk-return ratio?
200
The first basic rule in investing
What is "Keep it simple, stupid!"? Also known as the "KISS" principle.
200
An instrument by which the company owes you money; the company that issued the ________ makes regular interest payments and promised to pay back the face value at a specified point in the future. The return is low to minimal depending on the type. Examples include treasury ________ and savings ___________ issued by the US government.
What are bonds?
200
Mutual funds are a good __________ -term investment.
What is long?
200
_________ is found in nonprofit organizations such as churches, hospitals and schools.
What is 403(b)?
200
Savings accounts and money-market accounts are most appropriate for:
A) Long-term investments like retirement
B) Earning a high rate of return
C) Emergency funds and short-term goals
D) Savings accounts and money-market accounts should be avoided since they carry high risk.
What is C) Emergency funds and short-term goals?
200
The government agency responsible for regulating the stock market.
What is the Securities Exchange Commission?
300
If what you are investing in is primarily a tax deal, then it is probably not a good investment. Your motivation should be to make money, not save on taxes.
What is "Never invest purely for tax advantages"?
300
A saving account sold by an insurance company designed to provide payments to the holder at specified intervals usually after retirement. The fixed type of this investment offers low return and high fees.
What are annuities?
300
What is the standard diversification plan?
300
_______ contributions are taken from your gross income before taxes. Taxes are due upon withdrawal.
_______ contributions are taken from your net income after taxes. No taxes are due upon withdrawal.
What are Pre-tax & After-tax?
300
To ensure that some of your retirement savings will not be subject to income tax upon withdrawal, you would contribute to:
A) A 401(k) B) A Roth IRA
C) An annuity D) A traditional IRA
What is B) A Roth IRA?
300
Distribution of a portion of a company's earnings, decided by the board of directions, to a class of its shareholders.
What is dividend?
400
______________ is a risk-management technique tht mixes a wide variety of investments within a portfolio. The rationale behind this technique is that having a variety of investments will yield higher returns and lower risk.
What is "diversification"?
400
A CD is a ___________ __ ____________, typically at a bank. It is a savings account with a slightly higher interest rate because of a longer savings commitment (i.e. six months, one year, etc.).
What is a certificate of deposit?
400
Long-term investments, properly diversified, include the following mutual funds:
What are Growth, growth and income, international, aggressive growth?
400
If you leave a job and have money saved in your employer's retirement plan, always roll that money into an IRA using a direct ____________, which allows you to avoid taxes and penalties.
what is rollover?
400
In some cases, employers will match the employee contribution, but you should fund our plan whether your company matches or not. This statement refers to:
A) Single stocks B) Roth IRA C) Bond funds
D) 401(k)
What is D) 401(k)?
400
A savings plan operated by a state or educational institution designed to help families set aside funds for future college costs.
What is a 529 Plan?
500
The _______ _______ ______ is used by investors to compare the expected return of an investment to the amount of risk they take to get the return.
What is "risk return ratio"?
500
A __________ _________ __________ is a low-risk bank savings account with check-writing privileges. These are great for your emergency fund due to their liquidity and stability.
What is a money market account?
500
The ________ ________ is funded with after-tax money, which allows you to use the money in your account tax free in retirement. After five years, you can make a tax-free, penalty free withdrawal of earnings under these conditions: over 59 and a half years old, because of death or disability, first-time home purchase.
What is Roth IRA?
500
_______ ______ are various non-wage compensations provided to employees in addition to their normal wages or salaries. The purpose of these is to increase the financial security of staff members, and in doing so, improve worker retention across the organization. Some common examples are retirement plans, savings plans, insurance, educational reimbursement, incentive plans and cafeteria plans
What are employee benefits or employee benefits package
500
The reason that people need to save and invest is to: A) Enable their money to make money
B) Increase the money supply
C) Be able to get anything they want
D) Have an opportunity to talk with financial service providers.
What is A) Enable their money to make money?
500
Quality of an asset that permits it to be converted quickly into cash without loss of value; availability of money
What is liquidity?