A.1 Investing (part 2) Review

Which of the following are behavioral biases that can influence spending? (choose 3)

• Overconfidence
• Limited Attention Span
• Ageism
• Attribution Bias

• Chasing Trends

What is a brokerage account used for?

• It’s an online portal that allows you to set up appointments with a fund manager
• It’s the account you use to pay any taxes you owe on money you earned on your investments
• It’s a type of account used to buy and sell stocks, bonds, and funds
• It’s a special type of 401(k) plan that only some employers offer

Why is diversification a recommended investment strategy?

• Investing in a diversified portfolio guarantees that you won’t lose money with your investments
• If you tell your fund manager to use diversification, they’ll charge you lower fees
• Diversifying your portfolio helps reduce risk
• If you diversify your portfolio, you will definitely earn a high return

To minimize risk, you’ve decided to invest your money in a low cost index fund called Einstein’s Index Fund 500 (EIF). You’ve decided you can afford to invest $400 per month, and your account is set to automatically buy $400 worth of shares on or near the 15th of every month. Your first contribution is on Jan 15. On Jan 15, if EIF costs $40/share, how many shares did your contribution buy?

Why is it a smart investment strategy to use Dollar Cost Averaging and invest a specific amount from your budget every month?

• By automating the investment you can "pay yourself first" to prioritize saving and investing.
• You can avoid behavioral biases like regret and overconfidence by making regular investments
• By using a set investing schedule, you are creating a habit instead of relying on regular investments
• All of the above

What is meant by the term "robo-advisor?"

• An app that you download and access from your smart device to manage your investments
• A robot artificial intelligence who is trained to run an investment brokerage better than humans
• A set of computer programs that automatically makes adjustments to finance portfolios
• A fund manager who copies the same investments with every client so often it seems robotic

What advantages do robo-advisors have over their human counterparts? (Choose TWO)

• They have access to better investment choices than human advisors are allowed to invest in
• They can perform tedious tasks far more frequently than a human advisor would have time to do
• They are not subject to the same government restrictions as human advisors
• They typically charge much lower fees than the average human advisor would charge

Laura decides to use a micro-investing/spare change app. She makes 8 purchases a day and the average round-up amount on her purchases is $0.35. How much money will Cassidy have invested in a year?

• about $1000

• about $400
• about $750
• about $900

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CCSS.HSA.CED.A.1

CCSS.HSA.REI.B.3

CCSS.HSA.SSE.A.1

Since you’re usually investing less than a dollar at a time, one of the downfalls of micro-investing apps is…

• The IRS will be suspicious if you don’t invest more
• It’s not possible to make any money
• It’s possible that you won’t invest enough money to reach your goals
• You must share your earnings with other users of the app

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CCSS.HSA.SSE.A.1

What are 3 pros to taking a gap year after high school?

• Meeting new people
• Preventing burnout
• Gaining work experience
• High cost

• Losing momentum