Rule of 72
Stacey invests in a fund with an estimated annual return of 9%. Approximately how many years will it take for her investment to double?
8 years
Which retirement accounts have to be set up through your employer?
401(k) and 403(b)
What is it called when you live off savings and investments after you stop working?
retirement
A local bank advertises a high-yield savings account with an interest rate of 5%. How long would it take for savings to double at this rate?
14.4 years
What happens to your Roth IRA if you switch jobs?
Nothing! It has nothing to do with your job
What is a government benefit paid monthly to qualified retirees?
Social Security
A financial advisor tells their client that she expects the client’s investment to double in 9 years. What annual rate of return is she using to make her estimation?
8%
When do you pay capital gains taxes on money in a Roth IRA?
Never
What makes something a retirement account? (Hint: what is the age restriction on them, and what is the tax advantage?)
You can only take the money out at age 59.5 and you don't pay capital gains taxes
Suppose an investment is growing at an average rate of 3% per year. How much would a $350 investment be worth after 48 years?
$1400 (it would double twice)
When do you pay income taxes on money in a 403(b)?
In retirement, when you take the money out
Roth IRA
Sam says his account balance should double in 3 years. He currently has $56 in the account. What does he expect it to be next year?
(Hint: first calculate what rate of return is he expecting)
72/3=24
56*1.24=$69.44
What type of account allows you to invest as much money as you want? For example, if you wanted to invest $80,000 a year.
Brokerage
What type of taxes ALWAYS have to be paid, no matter what type of account you are using?
Income taxes