Smart investing
This is the main reason that investing early and having a longer time horizon helps investors exponentially make more money.
What is compound interest?
This is the definition of a bond.
What is a loan made by an investor to a borrower, such as a company or government, which agrees to pay regular interest and return the original money at a set time?
What is one way to make money from trading stocks?
1. What is receiving a dividend?
2. What is selling for a higher price than you bought it for (buying low and selling high)?
This is the definition of a fund.
Fund investing is a method where you pool your money with other investors to buy a professionally managed basket of assets.
Explain why it is important to start saving for retirement when you’re young, even though retirement is likely decades away.
Compound interest!
Will accept answers about needing money once you're retired and have no income
The real rate of return adjusts for this, which is measured by the CPI (Consumer Price Index)
What is inflation
This is the difference between a bond and a stock.
What is:
A bond is a loan you give to an organization while a stock is partial ownership in a company
This is the act of using material, non-public information to try to make money on stocks
What is insider trading?
Nancy is new to investing and is eager to get started. All of the following are things she should do EXCEPT...
A) Invest in a low cost index fund
B) Estimate how much she will need for retirement to determine how much she needs to invest each month
C) Pick individual stocks to see if she can beat the market
D)Invest in a diversified portfolio
What is C, Pick individual stocks to see if she can beat the market
This is what IRA stands for
What is Individual Retirement Account
This investing strategy discourages investors from "putting all their eggs in one basket," encouraging them to purchase many different asset types.
What is diversification?
This is the difference between a bond and a bond fund
What is:
A bond is considered to be a less diversified investment than a bond fund
This is what is a brokerage account used for.
What buy and sell stocks, bonds, and funds
This type of fund can be traded at any point during the day.
What is an ETF?
Which is one question an investor should ask when deciding whether or not they would like to open a Roth IRA or a Traditional IRA?
A) Do I want to make a guaranteed return of 6% or 8%?
B) Do I want to pay taxes now or later?
C) Do I want to take advantage of my employer’s matching contribution?
D) Do I want to take on more or less risk?
What is B
This phrase generally describes the relationship between risk and return in investing.
What is: higher risk, higher reward?
This is the type of account you need to purchase a bond
What is a brokerage account
You bought 10 shares of stock in Netflix for $50 per share. Two months later you sold the 10 shares of stock for $90 per share. What was your profit or loss on Netflix stock? (Assume that Netflix didn't pay a dividend and that you didn't incur any trading fees during that period.)
What is a profit of $400
Geraldo 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 Geraldo (net of fees)?
What is PassiveFund 500 (annual return of 6.4 vs. ActiveFund20's return of 6%)
Josie is trying to figure out how to implement her investing strategy. She wants to compare online brokers, financial advisors and robo-advisors. What are 2 questions that she should consider during her research?
This is the investment strategy that encourages investors to invest smaller amounts of money more frequently instead of trading large amounts of money less frequently.
What is dollar cost averaging?
This is the government department that issues federal, United States bonds
What is the U.S. Department of the Treasury (treasury bonds are alsoknown as T-Bonds)
These are two factors that can influence an individual company’s stock price.
What are...
Business profitability
Earnings
News and events
Speculation
Interest rates
Inflation
Industry health
Innovation
Explain three key differences between index funds and mutual funds.
-Index funds are passively managed while mutual funds are actively managed
-Index funds charge lower fees while mutual funds charge higher fees
-Index funds seek to match the market while mutual funds aim to beat the market
This government-sponsored retirement program is currently facing a critical funding shortfall with reserves projected to be depleted in the early 2030s
What is Social Security