Retirement
When should you start investing for retirement and why?
As soon as possible. More time for investment to grow = higher return
What are the defining features of a stock?
A stock is a small percentage of ownership of a company that is purchased by an investor.
What is the relationship between risk and return?
Which NFL team is Mr. Dowling's favorite?
Buffalo Bills
What is it called when a sentence is lacking either the subject or the verb?
Incomplete Sentence / Sentence fragment
What is a pension and how does it work?
A pension is a retirement plan where an employer contributes money to a fund that provides workers with a guaranteed income during retirement, usually based on salary and years of service.
What is a dividend and why do companies issue them?
A percentage of profits given to shareholders for holding the stock. Incentivizes trading by encouraging others to buy
Describe the power of time as it relates to investing.
The longer one has to invest, the longer your investment grows. This can be done either through compounded interest or reinvesting returns.
What is fiduciary responsibility as it relates to investment advice?
A pledge by an advisor to always act with your investment interests first - especially before their own monetary gain.
Mr. Dowling wakes up late, at 7:13am, one morning. He must get to work by 7:35am or he will be in trouble. His commute distance is 22 miles. Assuming he takes exactly 8 minutes to get ready and drives the same speed the entire drive, how fast must he drive to arrive on time (in MPH, rounded to the nearest whole number)?
94 MPH
7:35 - (13+8) = 14 minutes
22 miles / 14 minutes = 1.57 MPM
1.57 * 60 = 94 MPH (rounded)
What is a 401k and how does it work? (Be sure to explain what it is invested in)
A 401k is a retirement plan offered by an employer that allows employees to save and invest part of their paycheck into mutual funds before taxes. Contributions and earnings grow tax-deferred until withdrawal. Many employers offer matching contributions.
What are the two ways that an investor earns money when investing in stocks?
Dividends and capital gains
What is diversification and how does it work in practice?
Spreading out investments across different asset types and sectors (Ex: Bonds, gold, energy stocks, pharmaceutical stocks) to reduce risk
Based on the stock chart on the board, answer the following question:
What is the dividend yield of this stock and how often does this company pay that dividend?
7% annually (as of 3rd mod)
Quarterly payout
Which NFL quarterback that played for the Detroit Lions, won their first Super Bowl while playing for the L.A. Rams?
Matthew Stafford
What are Roth IRAs and traditional IRAs, and how are they different?
Both are individual retirement accounts that use compounded interest to give the investor a return.
A Traditional IRA: Invest money now without paying taxes initially (reduces taxable income for the year), but pay taxes when you withdraw the money
A Roth IRA: Invest money now and pay taxes on that income now. When money is withdrawn during retirement, you will not pay taxes.
Note: There are a few exceptions to the early withdrawal penalties on Roth IRAs, to include paying for college.
How do companies benefit from issuing stock?
Company raises revenue (capital) without taking on debt.
What are the defining features of a bond?
A bond is a loan you give to a company or government. It is repaid by the borrower within a set time frame with interest.
What is Mr. Dowling's favorite menu item from Culvers?
Chocolate - Peanut Butter Concrete Mixer
Which leader in European history had their beginnings painting in Vienna and would later become a veteran of World War I renowned for their bravery in battle?
Adolf Hitler
1. If you believe your taxable income will be lower later in life than it is now. This would allow you to pay lower taxes overall. (If the opposite occurs, you pay more in taxes)
2. You need to reduce your current taxable income to avoid paying a tax bill you cannot currently afford but will be able to afford in the future
What are the characteristics of an index fund and a mutual fund, and how are they different?
To get this correct, you must explain all information about both index funds and mutual funds, including but not limited to what they are invested in, fees, etc.
Both are funds that own shares of stocks. An Index fund is passively managed with lower fees and invested in a single market. Mutual funds are actively managed with higher fees and invested in a wide array of assets
Describe how compound interest works.
Earn interest both the original amount (principal) and the interest that has been added over time. This “interest on interest” effect makes your money grow faster the longer it’s invested.
Based on the stock chart on the board, answer the following question:
EA announced that they are being purchased by a private investor. The investor will pay every shareholder $210.00 per share.
1. Is now a good time to invest in this company?
2. Based on the stock chart, when did EA make this announcement?
1. Yes, as long as the price remains under $210 per share.
2. September 25th (right before the giant jump in price)
When cooking a whole chicken on a grill, what visual cue demonstrates when the chicken is fully cooked without cutting/puncturing the chicken or measuring its temperature?
When the fluid in the cavity of the chicken runs clear (does not contain blood)