Personal Finance Investing

It is meant for short-term goals

• Saving

• Investing

It involves assets like stocks and bonds

• Saving

• Investing

It harnesses compound interest and higher average returns to grow your wealth faster.

• Saving

• Investing

It involves very little risk

• Saving

• Investing

Your account balance will be impacted by the market

• Saving

• Investing

1. All of the following are reasons to invest, EXCEPT…

• 1. To minimize the impact on inflation, which causes you to lose purchasing power

• 1. To earn a consistent rate of return with lower risk than typical savings accounts

• 1. To build wealth by reinvesting your returns and allowing them to compound

• 1. To earn higher average rates of return than you would in a typical savings account

2. Which of the following statements BEST describes investing?

• 1. Putting $100 per month into an FDIC-insured bank account for short-term goals

• 1. Buying and selling stocks within the same day to take advantage of short-term price variation

• 1. Reducing the purchasing power of your money over time

• 1. Buying assets, like stocks, with the intention to hold them and grow your wealth over the long term.

3. An investor can best harness the power of compounding by doing all of the following, EXCEPT…

• 1. Making frequent trades

• 1. Starting to invest early

• 1. Reinvesting earnings

• 1. Minimizing risk

Traders

• • Quick short-term gains

• • Longer time frame

Investors

• • Risk is based in the probability of success of individual trades

• • Assume the market will increase over time; falling stock prices will bounce back up in the long-term