WorksheetsPart1- Investing- Personal Finance
Total questions: 24
Worksheet time: 36mins
If the price of a stock has increased the last 10 years, will it definitely go up this current year?
Yes
No
When you are looking at how to diversify your investment portfolio, a having a low-risk conservative strategy will usually make more money than balancing your investments between high risk, medium risk, and low risk investments.
Yes
No
According to this graph, 30 year-olds should be investing $700 a month. Will most people follow this advice? What would the best reason why or why not be?
Yes, because saving for retirement is important.
No, because investing is boring
No, because they may not be able to afford $700 a month
No, because they make too much money
Why do you earn less money using simple interest than you would using compound interest?
No difference
With compound interest, you earn interest on top of the interest that you already earned.
With simple interest your investments are safer and earn more money in the bank.
Which of these has the most risk?
Savings Account
Mutual Funds
Stocks
Bob is looking for a place to invest money he will need in 3-4 months. Is it a good idea to tell him that stocks are the best place to invest because they're great short term investments.
Yes
No
Saving is putting cash aside so it can be used very quickly if needed.
Yes
No
Stocks are a share of ownership in a company that could go up or down. Bonds are a loan to a company or government that pays interest.
Yes
No
Kyle says pensions and 401(k)s offer you “free money.” What does he mean by this?
Companies will match you or give you extra money for investing in the company retirement plan.
It is money you get for doing nothing.
It is money you can use at any time for any reason.
Pensions and 401Ks give tax breaks
All of these investors invest $5,000 per year. Which investor will retire with the most money?
Chris (blue)
Susan (grey)
Bill (green)
If Susan invested $50,000 and Bill invested $150,000. Why did Susan have a higher balance at the age of 65?
Susan started earlier and had more time to get compound interest
Susan had better investments
Susan made riskier investments that paid more in the long run
What are some other reasons outside of compound interest, age and length of savings that older people would have a higher percentage of 300K+ savings for retirement?
They usually have had more time to get higher paying jobs in their careers and make more money.
The system favors the older generation
Less disposable income
You start investing at age 25 instead of age 20, how much more money do you need to invest per month to have $1M at retirement?
$140 more per month
$40 more per month
$240 more per month
$4 more per month
Time is one of the most powerful tools when investing
Yes
No
TIME is important when investing because:
More compounding can occur
The market goes up and down short-term, but usually goes up over the long-term
Allows for a long-term approach to growing wealth
All of these are true
If you want to keep the money you make, the rate of return earned on an investment should be higher than the rate of inflation.
Yes
No
This economic force allows your money to grow quickly without doing anything but saving/investing it.
Compounding
Diversification
Inflation
Duration
If you desire your money to double in 6 years, what rate of return would you need to earn? (Hint...rule of 72)
12%
8%
10%
9%
Investing can be defined as putting your money to work over the long term, by buying and holding assets that will grow from compound interest.
Yes
No
Which of the following are TRUE about Index Funds?
Index funds are a type of mutual fund that have lower fees than actively managed mutual funds.
Index funds try to "beat the market." and are actively managed by fund managers.
Index funds are a type of mutual fund that are actively managed by fund managers.
Index funds try to "beat the market." and usually have high fees
Mutual funds have more diversification than individual stocks.
Yes
No
Owning a mutual fund or index fund is less diversified that owning an individual stock.
Yes
No
Diversification means having only one type of investment or many investment that are very similar
Yes
No
Bonds are a great way to diversify an investment portfolio in case the stock market should go down.
Yes
No
