Warm Up 11-13-24

1. Juan saved $1,000 from his summer job cleaning pools. Which of these account types would work best for him if he doesn't need access to the money for a number of years AND wants to earn the highest interest rate?

• 1. Regular Savings Account

• 1. Certificate of Deposit

• 1. Checking Account

• 1. Money Market Account

1. Which of the following accurately describes a difference between an individual bond compared to a bond fund?

• 1. A bond pays you dividends while a bond fund pays you regular interest

• 1. A bond is considered to be a less diversified investment than a bond fund

• 1. A bond is issued by a company while bond funds only invest in government bonds

• 1. A bond guarantees you a higher rate of return than a bond fund

1. An actively managed mutual fund…

• 3. Always performs better than an index fund

• 1. Generally has lower fees than a passively managed index fund

• 1. Is managed by a fund manager who charges a fee

• 1. Is a mix of two types of stocks and two types of bonds to diversify your portfolio

1. Katrina works for Penny's Pickles, which offers a 401(k) match for up to 3% of her salary, which is $65,000 per year. In her budget, she only has $150 per month available to save for retirement. What should she do?

• 1. Opt out of the 401(k) plan since she doesn’t have much to contribute; use the money elsewhere in her budget

• 1. Save the $150/mo in a bank account until she has enough to max out her 401(k), and then invest

• 1. Contribute the full $150/mo to the 401(k) because her company will match that full amount, "doubling" her investment every month

• 1. Contribute $75/mo to her 401(k) and $75/mo to an IRA, so that she's diversified

  What is one question an investor should ask when deciding whether or not they would like to open a Roth IRA or a Traditional IRA?

• 1. Do I want to make a guaranteed return of 6% or 8%?

• 1. Do I want to take on more or less risk?

• 1. Do I want to take advantage of my employer’s matching contribution?

• 1. Do I want to pay taxes now or later?