Investing 101

Savings is a short-term commitment to meet unexpected shortfalls.

• True

• False

What is investing?

• A short-term commitment to meet unexpected shortfalls. Helps meet short-term goals.

• A long-term approach to watch your money grow. Helps you meet long-term goals.

Rule of 72

• Estimates the amount of money to invest in order to make a profit.

• This estimates the length of time (in years) for funds to double with compound interest.

• Precisely calculates the length of time (in years) for funds to double with compound interest.

Risk and return means that the returns you will get when investing your money will not vary.

• True

• False

A mutual fund is

• like a loan where you are giving money in exchange for an interest payment.

• is issued by the government to support government spending (schools, roads, low-income housing).

• an investment with diversified stocks and bonds.

This has a fixed interest rate that you leave in the bank for a fixed period of time.

• Government Bond

• Stock

• Certificate of Deposit

Different bonds and stocks even have different degrees of risk.

• True

• False

An item that is worth far more than it was originally sold for because of its rarity and/or popular demand.

• CD

• Junk Bond

• Collectible

Compounding is so powerful and recommends that you save a lot for a short period of time.

• True

• False

Stocks are long-term investments.

• True

• False