Intro to Investing

The act of buying assets to grow your wealth is

• Interesting

• Investing

• Inflation

• Insane

It is recommended that an individual has an emergency fund established before investing. This emergency fund should have enough money to cover ___________ months of your expenses.

• 0-3

• 2-5

• 3-6

• 4-7

Investing guarantees you will grow your wealth

• True

• False

__________ is the probability of loss

• inflation

• risk

• investment

Inflation is ...

• an increase in the value of a dollar over time

• a decrease in the cost of living over time

• an increase in the cost of living over time

• the biggest curse word in personal finance (DO NOT PICK THIS ANSWER)

This historical level of inflation in the United States is approximately

• 1%

• 3%

• 5%

Let’s say an investor has $100,000 that he plans to use in retirement. If there’s a 3% inflation rate, what would the purchasing power of that $100,000 be in 20 years if that money isn’t invested?

• Due to decreased purchasing power, the investor’s retirement savings would now be worth a negative value.

• Due to inflation, the investor’s retirement savings would be worth about $50,000

• Due to compound inflation, the investor's retirement savings would now be worth about $400,000.

To best harness the power of compound interest, what actions can investors take? Select all that apply.

• Invest in cash

• Take advantage of the time value of money by investing early.

• Invest, withdraw money, and then reinvest again

Evaluating the probability of loss allows us to establish

• an understanding of risk

• an expectation of the return required to accept the risk

• a guaranteed way to increase the value of our investments

What is the real return if:

- the investment earns 10% annually

- inflation is 3% annually

• 13%

• 10%

• 7%

• 3%