Fin Lit Mod 7-9 Review

An asset is something that you________, for example, your house or car.

• borrow
• loan
• own
• broker

What is the difference between a Traditional and Roth IRA?

• A traditional IRA's contributions are not taxed until you withdraw them at retirement. A Roth IRA's your contributions are taxed when you invest.

• A Roth IRA's contributions are not taxed until you withdraw them at retirement. A Traditional IRA your contributions are taxed when you invest them in.

Which type of account will your employer often "match" your contributions?

• Traditional IRA

• 401K

• Roth IRA

• Pension

Which has less risk?

• Bonds

• Stocks

If Ralph invest $1000 dollars at 6% interest, how long will it take him to double his money?

• 21

• 12

• 6

• 24

Earning interest on interest is called

• Extra interest

• Inflation interest

• Simple interest

• Compound interest

The "time value of money" means that

• money paid out today is worth less than if the money is paid out in the future

• money received today is worth more than the same amount of money received in the future

• the more time a person has to save, the lower the return on the money

• the longer money is held, the less likely it will be spent

Why shouldn't we invest our emergency fund or other short-term savings?

• Investments are risky and can drop in value, especially in the short term.

• Investments are safe and can grow in value, especially over the long term.

• We should invest all of our money so it can grow quickly and we can become rich.

• We should never invest any money because we could lose it all.

What is an emergency fund?

• A savings account set aside for unexpected situations.

• A way to invest for retirement.

• Something most people don't need, because emergencies are rare.

• An investment account that can grow over time.

This short phrase tells us that we should make sure saving and investing are the highest priority in our budget

• Treat Yourself

• Pay Yourself First

• Pay Yourself Last

• Money doesn't grow on trees