SAVINGS AND INVESTING

True or False. To save money, you need to earn less than you spend.

• True

• False

Answer explanation

That's backwards!

The most important reason to have savings is for emergency expenses.

• True

• False

Answer explanation

That's backwards!

True or False. The most important reason to have savings is to earn a return on your investment.

• True

• False

Answer explanation

Savings accounts pay very low interest rates.

True or False. For people that can’t borrow money, the lack of an evergency fund can drive them into homelessness.

• True

• False

True or False. How quickly and easily you can convert your assets into cash is called return on investment.

• True

• False

Answer explanation

It is called liquidity

True or False. "Pay yourself first" means to spend money on your wants, before you start saving money.

• True

• False

Answer explanation

It means save first, before paying other people.

True or False. Automatic transfers can help you save because once you set them up you don’t need to remember to move money into your savings account.

• True

• False

True or False. Automatic transfers can help you save because once you set them up you don’t “see” the money, so you are less likely to miss it.

• True

• False

True or False. Returns on investment come from income generated by the investment, not from from increases in the market value of the investment.

• True

• False

Answer explanation

It comes from both

True or False. Your financial plan should include both savings and investment.

• True

• False