Saving VS Investing
How does investing in the stock market differ from putting money in a savings account at a bank?
Investing allows you to accumulate wealth for retirement while saving is best for short-term purchases or emergencies
What is one difference between an individual bond compared to a bond fund?
A bond is considered to be a less diversified investment than a bond fund
Why is diversification a recommended investment strategy?
Diversifying your portfolio helps reduce risk
Keyder works for Penny's Pickles, which offers a 401(k) match for up to 3% of his salary, which is $45,000 per year. In his budget, he only has $150 per month available to save for retirement. What should he do?
Contribute the full $150/mo to the 401(k) because his company will match that full amount, "doubling" his investment every month
TRUE or FALSE:
Exchange Traded Funds (ETF) prices can change throughout the day as they are exchanged on the market
TRUE
You bought 10 shares of stock in StreamingVideoCo for $50 per share. Two months later you sold the 10 shares of stock for $75 per share. What was your profit or loss on StreamingVideoCo stock?
Profit of $250
How does compound interest help you build wealth?
Compound interest allows you to earn interest not only on the amount you have saved, but also on the interest you've already earned
How is a bond different from a stock?
A bond is a loan you give to an organization while a stock is partial ownership in a company
What is a characteristic of dollar-cost averaging?
Dollar-cost averaging is a way to decrease your risk
Rinaldy is 22, just started his first full-time job, and is selecting his investments through his company's 401(k) plan. Why might a target date fund (TDF) be a good option for Rinaldy?
A TDF will automatically adjust his asset allocation based on the retirement year he has chosen
A defining feature of an actively managed fund is ...
Is managed by a fund manager who charges a fee
How can someone make money from investing in a stock? (2 ways)
They receive dividends or they sell the stock at a higher price than what they bought it for
Alex has saved $5,000 in a savings account that earns 0.5% interest annually. What will most likely happen to the purchasing power of his savings over time?
His purchasing power will DECREASE because the interest rate is lower than the historical rate of inflation
TRUE or FALSE:
You buy a bond with a fixed coupon rate of 7%. A year later, similar bonds that are issued have a coupon rate of 5%. The price of your bond has now decreased.
FALSE
The price of your bond will increase
Why is it important for you to understand your risk tolerance before you start investing?
You should tailor your investment portfolio so that it assumes an amount of risk you are comfortable with
What is one question an investor should ask when deciding whether or not they would like to open a Roth IRA or a Traditional IRA?
Do I want to pay taxes now or later?
_____ _____ provide a low-cost, diversified investment option that closely matches the overall return of a given index, such as the S&P 500.
Index Funds
TRUE or FALSE:
"Pick individual stocks to see if you can beat the market" is generally seen as good investing advice.
FALSE
What is a brokerage account used for?
It’s a type of account used to buy and sell stocks, bonds, and funds
A disadvantage of using a robo-adviser might be that…
You may not be able to get advice from a human financial advisor when you want it
Describe the relationship between risk and return when considering an investment?
Investors expect to earn a higher return when they invest in a high risk asset
What is Social Security?
Social Security is a government program that pools contributions from current workers to fund retirement support benefits to those who are eligible
Anthony reviews his brokerage statement and sees the following two mutual fund investments that he made a year ago. ActiveFund20 had an average return (before fees) of 7.0% per year and an annual fee of 1%. PassiveFund500 had an average return (before fees) of 6.5% per year and an annual fee of 0.1%. Which investment had a better return for Anthony (net of fees)?
PassiveFund500: It had an overall return of 6.4% while ActiveFund20 had an overall return of 6.0%
As a shareholder in a public company, you may receive _________ from the company, if the company chooses to pay them.
Dividends
The movie "Iron Man' was released in what year?
2008
The first Godzilla movie was released in what year?
1954
In what two seasons were the Philadelphia Eagles Super Bowl champions?
2017 and 2024
In what year was Yonkers founded?
1646
In what year was Mr. Perillo born?
1990
Who is the only president to serve more than 2 terms in office?
Franklin Delano Roosevelt