Future Millionaire
What behaviors can prevent people from being successful with their investments?
Acting on emotion
Following others
You bought 10 shares of Netflix stock at $10, later you sold those 10 shares for $30 per share. What was your profit or loss?
$200 profit
If you put $2000 in a savings account that earns 0.5% what will happen to the purchasing power of this money over time?
it will decrease, eroded by inflation
Describe the power of compound interest in your own words
Earning interest on your interest
True or False ETF prices change throughout the day
True
Name one way in which a bond is different than a stock
For 100 point bonus name all three
Price set daily
loan rather than ownership
fixed return and term
Why are the majority of day traders unsuccessful?
Because it is very difficult to time the market
What is the main advantage of having a diversified portfolio?
For a hundred bonus points explain how this works
Reducing Risk
Describe the relationship between risk and return.
higher risk means higher returns and lower risk means lower returns
Why are index funds a popular investment? Name two benefits
low cost
diversified
lower risk in long term
Easy (buy and hold)
What is a brokerage account used for
Buying and selling stock, ETF's, mutual funds and bonds
What is the main characteristic of an actively managed mutual fund?
It's managed by a fund manager for a fee
What is risk tolerance and why is it important to know your risk tolerance before investing
The level of risk you are willing to take on in your investment portfolio
So you can make sure to choose investments that fit your risk profile.
What are the two main ways to make money from investing in a stock?
Buy low sell high
dividends
What is dollar-cost averaging
Buying small amounts of stock frequently over an extended time frame.
Explain in your own words why Social Security is in trouble
Less money going in and a greater demand (more retirees) receiving benefits
If you bought a bond with a coupon rate of 5% and a year later the coupon rate for similar bonds was 3%, what would happen to the price of your bond?
Price will increase
What is the most important difference between investing and saving?
Investment: Accumulate wealth for retirement
Savings: Short-term purchases and emergencies
Name one of the differences between a bond and bond fund
Bonds are less diversified bond funds are more diversified
bond funds don't have a maturity while bonds do
bond rates are set, bond fund prices fluctuate
Explain how Social Security works in your own words
Everyone that works contributes to the pool, the pool is used to fund benefits for current retirees.
Which portfolio performed better over the year
Portfolio A: Index360, 7% return, annual fee 1%
Portfolio B: CowboyUp, 4% return, annual fee 1% Scooterville, 5% return, annual fee 1%
Portfolio C: ETF GIANT, 9% return, annual fee 2.5%
Portfolio B, 7% return is better than
C=6.5%
A=6%
What is a target date fund TDF?
A fund where the risk tolerance decreases as you approach retirement
Why is someone new to investing better off using an investment manager rather self investing?
What is the likelihood that their investment manger will beat the market over a long period like 20 years
Support, comfort of having an expert, someone to answer questions.
4% or less
What are the three potential benefits of owning a stock?
1. May receive a dividend
2. Stock price may increase
3. Ownership in the company
What is the difference between a Roth IRA and a Traditional IRA
Roth: pay taxes now, not at retirement
Traditional: Pay no taxes now, pay taxes at retirement