Chapter 12 Investing and Retirement

Front

What is the primary reason for diversifying investments?

Back

To balance high-risk investments with more steady and predictable ones.

Front

Is it necessary to wait until you have money to give before being generous?

Back

False

Front

What are Roth IRA, 401(k), 403(b), 457, and Simplified Employee Pension examples of?

Back

Retirement plans.

Front

What is the term for the process that allows investing money to earn more money over time?

Back

Compound growth.

Front

Complete the phrase: Live like no one else now, so later you can live and _____________ like no one else.

Back

Give.

Front

What is the benefit of compound growth in investing?

Back

It allows your investments to grow exponentially over time as earnings are reinvested.

Front

What is the difference between a Roth IRA and a traditional IRA?

Back

A Roth IRA allows for tax-free withdrawals in retirement, while contributions to a traditional IRA may be tax-deductible.

Front

What is the purpose of a 401(k) plan?

Back

To provide a tax-advantaged retirement savings option for employees.

Front

What does it mean to live below your means?

Back

Spending less than you earn to save and invest for the future.

Front

What is the significance of employer matching in a 401(k) plan?

Back

It is essentially free money that can significantly increase retirement savings.