Saving
According to the 50/30/20 rule, at least how much should you save from each paycheck?
20% of your income
What is the highest credit score an American can have?
850
The ____ the risk, the _____ the reward
The higher the risk, the higher the reward
What type of insurance are you legally required to have in the state of Iowa?
Liability car insurance
What does the S in S.M.A.R.T goal stand for?
Specific
You should always pay yourself
What factor has the biggest impact on your credit score?
How do stocks and bonds earn money?
1. Stocks
** Buy low, sell high
** Dividends
2. Bonds
**Interest
List two perils that are not covered by homeowner's insurance
1. Floods
2. Landslides
3. Infestations
4. Nuclear hazard
5. Earthquakes
6. Mold
7. Wear and tear
8. Government action
How much should you have saved in your emergency fund?
3-6 months worth of fixed expenses unless
1. You don't have a stable job
2. You have a high insurance deductible
Define liquidation
How fast an asset can be turned into cash
Name two actions that you can take to increase your credit score.
1. Pay your bills on time
2. Get a credit card
3. Begin building credit as soon as possible
4. Any other ones that I will approve
What type of correlation should your assets have?
A negative correlation
*** Asset prices move in opposite directions
*** Reduces risk
A classic example is stocks and bonds, where when interest rates rise, stock prices may fall while bond prices tend to increase.
At what severity and frequency level do you transfer risk to an insurance company?
Low frequency high severity
Revolving- Credit cards
Installment- Loans
How much is insured in an FDIC bank account?
Up to $250,000 per account
How long does a hard inquiry stay on your credit report?
2+ years
What is the difference between a traditional IRA and a roth IRA?
Traditional- The money goes in tax free, but you pay taxes when you are older and withdraw it.
Roth- The money is taxed when it goes into the retirement account, but you do not have to pay taxes when you are old.
How much life insurance do you need if there are two providers in your house?
4 – 10 times of your yearly income
Which of the following savings products offered is the least liquid?
Savings account
Money market account
Certificate of Deposit (CD)
High yield checking account
Certificate of deposit
What are the two main difference between a bank and a credit union?
1. A credit union is owned by its members
2. A credit union is non-profit
What are the three main credit reporting agencies?
1. Transunion
2. Equifax
3. Experian
What is the difference between asset allocation and diversification?
Asset allocation- Buying multiple different types of assets to spread risk (bonds, socks, mutual funds, etc...)
Diversification: Spreading your asset purchases across multiple business industries (hospitality, real estate, etc...)
What do the numbers in a 20/40/15 liability insurance policy cover?
$20,000 per person bodily injury
$40,000 per incident bodily injury (everyone in the car)
$15,000 for property damage
1. Part time job
2. Retirement accounts
3. Social security
4. Pensions