Investing Flashcardz

Front

A key difference between saving and investing is

Back

Saving is for emergencies & goals, investing is for long-term wealth

Front

Why is compound interest more beneficial than simple interest?

Back

Your money grows faster when it is compounded

Front

Which would be considered the highest risk investment type (of those shown)?
Options: Stock, Bond, Mutual Fund, Money Market Account

Back

Stock

Front

Historically, the relationship between risk and return can be stated as

Back

Higher risks will have potential for higher return

Front

A diversified portfolio is desirable because

Back

It often times decreases or minimizes risk

Front

Why is it important to start investing as soon as possible (when you are young)? Options: You take less risk when you are young, so money will be safe; Investing is an easy way to make quick money; You have more time for your money to compound; Fees on investments are cheaper when you are younger.

Back

You have more time for your money to compound

Front

True or False: Investing in a diversified portfolio of stocks guarantees you will not lose money.

Back

False

Front

You can always profit from stocks by holding the shares of stock for at least 5 years.

Back

False

Front

Which investment vehicle represents ownership in a company?

Back

Stock

Front

Why shouldn't Sarah invest her $1200 in stock for her vacation?

Back

Investing in one company's stock is quite risky, one year probably isn't enough time for one stock to turn $1200 into a month's vacation, and investing your whole savings in the stock market is a poor financial decision.