💸 Investing Basics
What is compound interest?
Interest on both principal and earned interest
What is a 401(k)?
Employer retirement plan with pre-tax money
What is asset allocation?
Dividing money across investments to balance risk/reward
What’s the purpose of an emergency fund?
Cover unexpected expenses
What does IRA stand for?
Individual Retirement Account
Why is it better to start investing early?
More time for compound growth
What’s the main advantage of a Roth IRA?
Withdrawals are tax-free in retirement
Why should you rebalance a portfolio?
Keep investments aligned with goals
Name one tool to track spending.
A budget
How many months of expenses should an emergency fund cover?
3–6 months
What’s the difference between stocks and bonds?
Stocks = ownership, bonds = loan
Name one retirement account for small business owners.
SIMPLE IRA or SEP IRA
Which is usually riskier but offers higher returns — stocks or bonds?
Stocks
Why is insurance important in financial planning?
Protects from big financial losses
True or False: You can contribute to a Roth IRA with pre-tax money.
False (after-tax money)
What is diversification?
Spreading investments across many types to reduce risk
What does “vesting” in a 401(k) mean?
The amount of employer contributions you fully own over time
What is risk tolerance?
Your ability to handle ups and downs in investments
What is estate planning?
Preparing legal tools like wills and trusts for after death
What percentage of income is often recommended for retirement savings?
About 15% of income
What is a mutual fund?
A pool of money from many investors used to buy stocks, bonds, etc.
What is an RMD (Required Minimum Distribution)?
The minimum amount you must withdraw from some retirement accounts at a certain age
What is dollar-cost averaging?
Investing a fixed amount regularly regardless of market ups or downs
Name two types of insurance important in financial planning.
Health insurance, life insurance, disability insurance, homeowners/renters insurance (any two)
At what age can you usually withdraw from retirement accounts without penalty?
59½ years old