What is compound interest?

• Interest that you earn/pay on the principal over the term of the loan

• Interest on interest

• The annual percentage rate (APY)

• Principal x Interest Rate x Term = Total Interest Paid

What is a mutual fund?

• A fund whose price is based on the market price, and is sold only in full shares and can be traded throughout the day

• A type of fund whose holdings match or track a particular market index.

• A company that pools money from many investors and invests the money in securities such as stocks, bonds, and short-term debt.

• This fund automatically rebalances your portfolio with the right mix of stocks, bonds and money market accounts as you age.

What is a index fund?

• A fund whose price is based on the market price, and is sold only in full shares and can be traded throughout the day

• A type of fund whose holdings match or track a particular market index.

• A company that pools money from many investors and invests the money in securities such as stocks, bonds, and short-term debt.

• This fund automatically rebalances your portfolio with the right mix of stocks, bonds and money market accounts as you age.

What is a target date fund?

• A fund whose price is based on the market price, and is sold only in full shares and can be traded throughout the day

• A type of fund whose holdings match or track a particular market index.

• A company that pools money from many investors and invests the money in securities such as stocks, bonds, and short-term debt.

• This fund automatically rebalances your portfolio with the right mix of stocks, bonds and money market accounts as you age.

What is an ETF (exchange traded fund)?

• A fund whose price is based on the market price, and is sold only in full shares and can be traded throughout the day

• A type of fund whose holdings match or track a particular market index.

• A company that pools money from many investors and invests the money in securities such as stocks, bonds, and short-term debt.

• This fund automatically rebalances your portfolio with the right mix of stocks, bonds and money market accounts as you age.

The practice of putting a fixed amount into an investment over a period of time, regardless of the price of that investment

• Dollar cost averaging

• Investing

• Diversification

• Trading

When it comes to the stock market, sometimes perception is more important than reality.

• True

• False

You should check how the stock market is doing every day and adjust your retirement funds accordingly.

• True

• False

How does a mutual fund differ from an index fund?

• Mutual funds are passively managed while index funds are actively managed.

• Mutual funds typically have lower fees than index funds.

• Mutual funds group the stocks in their funds together while index funds do not.

• Mutual funds are actively managed by a professional while index funds are not.

Which of the following statements about having a financial planner manage your investment portfolio is TRUE?

• You don’t have a say in how you want to manage your portfolio.

• Having a manager often costs less than managing the portfolio yourself.

• The manager will charge fees that will decrease the profits you gain.

• Financial planners are guaranteed to beat the market all the time.