Education
Budgeting
Investments
Life Insurance
Disability Insurance
100
Name one way of paying for educational expenses
Loans, Savings, Family, 529, Grants, etc. There are many ways of funding your college goals and you should consult a professional to determine which type of funding mechanism or mix of funding mechanisms is the best fit for you.
100
What Percentage of your income should you be saving for retirement?
20%
100
True or False? Changes in the economy do not affect the stock and bond markets.
False. They directly affect the stock and bond markets. In periods of expansion and good economic health the markets will typically trend up. During times of contraction and economic hardship they will trend down.
100
Name one type of life insurance
Term, Whole Life, Universal Life, Variable Whole or Universal Life. There are many types of Life Insurance available to individuals and you should consult a professional to determine which type or combination of types is right for you.
100
True or False? Social Security Disability will provide income replacement close to what you were making before becoming disabled
False. Social Security Disability provides a benefit that is a small fraction of what you were making before becoming disabled. Also, more than 80% of people that apply for Social Security Disability are rejected.
200
This plan is sponsored by the State of Florida and allows you to pay for tuition costs today at a fixed rate – rather than whatever rates are in the future
Florida Prepaid.
200
What should your fixed overhead household expenses be as a percentage of your take home pay?
50%
200
True or False? Diversification does not benefit your portfolio.
False. Diversification is shown to reduce volatility in your accounts. Losses in one portion of your portfolio can actually drive returns in another. By reducing the downside risk of your portfolio you can increase your portfolio’s long term returns.
200
This cheaper type of life insurance accumulates no cash value and only covers you for a set period of time
Term Insurance
200
True or False? Disability coverage through work, in most cases, will provide income replacement close to what you were making before you became disabled
False. In almost all cases the employer funded plans cover less than 2/3 of what you were making previously. This benefit is typically offset by social security (So, if you receive Social Security benefits you lose $1 for every dollar social security pays you) and these benefits are taxable. This can mean you make less than half of what you were bringing home before your disability.
300
This is the form you complete to find out how much financial aid is available to you
FAFSA. The Free Application for Federal Student Aid (known as the FAFSA) is a form that can be prepared annually by current and prospective college students in the United States to determine their eligibility for student financial aid (including the Pell Grant, Federal student loans and Federal Work-Study).
300
As a safety net, you should have how many months’ income saved?
3-6 months. We recommend 6, but something is better than nothing. These funds should be saved for a multitude of reasons including potential job loss, short or long term disability or potential long term care need. (Anything over 3 months is an acceptable answer)
300
True or False? Since 1950 a portfolio that is 50% stock and 50% bond has never lost money.
True. Since 1950 a portfolio that is invested 50% in the S&P 500 and 50% in the Barclays Aggregate index has never posted negative returns over any 5 year period.
300
This type of life insurance accumulates cash value that can be used later down the line
Whole Life, Universal Life, Variable Whole or Universal Life. Life insurance cash value accumulates tax free and can be used at a later date. Because of the tax free nature of its growth, it is a common goal funding mechanism for folks in higher tax brackets.
300
True or False? You are more likely to become disabled than die prematurely.
True. 1 in 7 people will experience a long term disability before they reach age 65.
400
This type of educational savings account is funded with after tax dollars, grows tax deferred, and withdrawals are tax free if used for “qualified educational expenses”
529 Plan. Money from a 529 plan can be used for tuition, fees, books, supplies and equipment required for study at any accredited college, university or vocational school in the United States and at some foreign universities.
400
What should discretionary spending be as a percentage of take home pay?
30%
400
True or False? The last 10 years has truly been the “Lost Decade” with the S&P 500 posting negative returns.
False. The S&P was at 835.32 on 10/1/2002. At 1460.93 on 10/1/2012 the S&P 500 was up a cumulative 82%.
400
Is cash value growth in a life insurance policy taxable or tax free?
Tax Free. Life insurance cash value accumulates tax free and can be used at a later date. Because of the tax free nature of its growth, it is a common goal funding mechanism for folks in higher tax brackets.
400
Are benefits from a policy paid for by your employer taxable or tax free if you become disabled?
Taxable. Your employer deducts the premiums paid for your policy as a business expense. This deduction means that the benefit that is paid is taxable to the recipient. Personal disability policies pay benefits that are non-taxable, because they are paid for with after tax dollars – money you have already paid taxes on as income.
500
Unlike a 529 Plan this type of Educational Savings Account can be used to fund K-12 expenses as well as college expenses
Coverdell ESA. The tax treatment of Coverdell ESAs is much the same as that of 529 plans with a few important differences. Like a 529 plan, Coverdell ESAs allow money to grow tax deferred and proceeds to be withdrawn tax free. However the definition of qualified expenses in an ESA includes primary and secondary school, not just college and university.
500
What percentage your income should go into permanent life insurance?
5%
500
True or False? Most of your portfolio’s returns come from Market Timing – when you bought or sold an investment.
False. 92% of your portfolio’s return can be attributed to Asset Allocation – how your funds are positioned in your portfolio. 6% can be attributed to Security Selection and only 2% to Market Timing.
500
Cash value in this type of policy is invested in the stock and bond markets and grows if those markets go up
Variable Life, Variable Universal Life, Variable While Life, VUL, etc. (Anything with Variable or V in the name). While the growth prospects are higher, there are added risks to investing in Variable Life Insurance Policies as compared to policies that accumulate cash value at a fixed rate.
500
Are benefits from a personally owned and funded disability policy (outside of the policy you have at work) taxable or tax free?
Tax Free. In the policy you have at work, your employer deducts the premiums paid for your policy as a business expense. This deduction means that the benefit that is paid is taxable to the recipient. Personal disability policies pay benefits that are non-taxable, because they are paid for with after tax dollars – money you have already paid taxes on as income.
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