FPL My Life at 25 Investment Vehicles

Front

401k

Back

An employer sponsored plan for employees to invest for retirement.

Answer explanation

A 401k is specifically an employer-sponsored plan that allows employees to save for retirement through tax-advantaged contributions, making this choice the correct answer.

Front

A risk management technique that mixes a variety of investments to maximize growth and reduce risk

Back

Diversification

Answer explanation

Diversification is a risk management technique that involves mixing various investments to optimize growth while minimizing risk. This strategy helps to spread risk across different assets, making it the correct choice.

Front

Of these accounts, which typically has the least amount of risk? Bond (corporate), Stocks, Certificate of Deposit, Bond (government)

Back

Certificate of Deposit

Answer explanation

A Certificate of Deposit (CD) is typically insured and offers fixed returns, making it the least risky option compared to corporate bonds, stocks, and government bonds, which can fluctuate in value.

Front

ETF

Back

A pooled investment which typically follows a market index or sector.

Answer explanation

An ETF, or Exchange-Traded Fund, is a pooled investment that typically tracks a market index or sector, making the first choice the correct answer. The other options describe different types of investment vehicles.

Front

Mutual Fund

Back

An investment fund managed by a professional that is diversified.

Answer explanation

A mutual fund is an investment fund managed by professionals, pooling money from many investors to create a diversified portfolio. This distinguishes it from other options like retirement plans or savings accounts.

Front

Money Market Account

Back

A long-term savings account which requires a high minimum balance.

Answer explanation

A Money Market Account is a long-term savings account that typically requires a high minimum balance, offering higher interest rates than regular savings accounts.

Front

An individual retirement investment account where investment growth is tax free but deposits are taxed.

Back

Roth IRA

Answer explanation

A Roth IRA allows for tax-free growth on investments, meaning you pay taxes on contributions but not on withdrawals in retirement, making it the correct choice for the described account.

Front

An individual retirement investment account where deposits are made tax free but withdrawals are not.

Back

Individual Retirement Account (IRA)

Answer explanation

An Individual Retirement Account (IRA) allows tax-free deposits, but withdrawals are taxed. This distinguishes it from a Roth IRA, where withdrawals are tax-free. Therefore, the correct answer is the Individual Retirement Account (IRA).

Front

Of these accounts, which typically has the greatest amount of risk? Bond (corporate), Stocks, Certificate of Deposit, Bond (government)

Back

Stocks

Answer explanation

Stocks typically have the greatest amount of risk compared to corporate bonds, government bonds, and certificates of deposit, as their value can fluctuate significantly based on market conditions.

Front

A share of ownership in a corporation.

Back

Stock

Answer explanation

A share of ownership in a corporation is referred to as 'stock'. It represents equity in the company, distinguishing it from bonds, which are debt instruments.