IRA vs 401(k)
Who can open an IRA?
Anyone who is alive
Are single stocks a good investment? Why?
No, they are riskier.
How is a bond different from a stock? What is the main difference?
Bonds have a guaranteed return, stocks do not.
What is a brokerage account?
It’s a type of account used to buy and sell stocks, bonds, and mutual funds.
This animal holds hands when they sleep.
Sea otters - to keep from drifting apart while they sleep.
Where can you get access to a 401(k)?
Your employer.
What are mutual funds?
A pool (lots) of stocks that you can invest in.
What does diversification mean with regard to investing?
Spreading your investments out (buying multiple mutual/index funds) so that you decrease your risk.
According to the rule of 72, how many years will it take for your money to double when invested in a mutual fund that provides 10% growth?
7.2 years
This item was sold as medicine in the 1830s, but is now eaten regularly, not as medicine.
Ketchup
What is the yearly contribution limit on an IRA?
$6k
What is the average rate of return when investing in mutual funds and holding them for more than 10 years?
10%
When do people invest more in bonds than in stocks?
When they want a less risky investment, typically as they get older.
Should an investor sell their stocks when the market is experiencing a downturn? Why?
No, the history of the stock market shows us that the market will rebound.
The term for how objects stretch as they approach a black hole is called what?
Spaghettification
What is the yearly contribution on a 401(k)?
$19k
What is the most important factor for building wealth through investing?
Time
What is the difference between a mutual fund and an index fund?
Mutual funds are actively managed.
At what salary are you NOT eligible to contribute to a ROTH IRA?
$140k
This animal can live for over a week without it's head.
A cockroach.
What is the non-profit version of a 401(k) called?
403(b)
Explain how compound interest works.
Like a snowball rolling down the hill, picking up snow with each rotation.
Explain 2 differences between ROTH and Traditional accounts.
ROTH has tax-free growth.
Traditional has pre-tax contributions.
Traditional plans pay taxes in retirement.
ROTH has post-tax contributions.
Eligibility may be affected by how long you work for a given company, in which account type?
Pension
It is impossible to hum while holding this?
Your nose.