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WorksheetsRetirement, Savings, Insurance, and Taxes Review
Total questions: 100
Worksheet time: 34mins
What is the primary purpose of a savings account according to the image?
To borrow money
To store money securely while earning interest
To invest in stocks
To pay for daily expenses
Which of the following is NOT listed as a use for savings in the image?
College
Luxury travel
Retirement
Investing
According to the image, savings help in personal financial success because they:
Allow for future large purchases without credit
Increase personal debt
Reduce educational opportunities
Decrease financial security
According to the financial advice given, what percentage of your monthly net income should ideally be saved?
10%
20%
30%
40%
If you are earning $2500 monthly, how much should you ideally save according to the financial planner's recommendation?
$200
$400
$500
$600
What is the risk associated with not having any savings according to the image?
You may need to borrow money
You are living paycheck to paycheck
You might invest unwisely
You will have to work more hours
What is the primary goal of investing?
To spend money on luxury items
To increase wealth over time for long-term financial goals
To cover daily expenses
To save money in a risk-free manner
Why is investing considered riskier than saving?
Because it involves setting aside money for short-term use
Because the money is not capable of being lost
Because it involves the potential for losing money
Because it guarantees higher returns
What is a key characteristic of a High-Yield Savings Account compared to traditional savings accounts?
No interest is accrued
Lower interest rates
Higher interest rates
Fixed maturity date
Which type of savings account is described as having more significant restrictions but offers higher interest rates?
Traditional Savings Account
High-Yield Savings Account
Money Market Accounts
Cash Management Account
What is a distinctive feature of a CD (Certificate of Deposit) Account?
Offers a complete financial services program
Helps reach specific savings goals
Guarantees a specific interest rate with a maturity date
Provides lower interest rates
Which savings account is designed specifically to help achieve certain savings goals?
Specialty Savings Account
Traditional Savings Account
Money Market Accounts
CD (Certificate of Deposit) Account
What does a Cash Management Account typically offer?
Higher interest rates than passbook accounts
A specific interest rate with a maturity date
A complete financial services program for a single fee
Higher interest rates with significant restrictions
Which of the following is NOT listed as an advantage of savings plans according to the image?
High liquidity
Low risk
Tax-favored
Interest rates are defined
What is a disadvantage of savings plans as mentioned in the image?
High fees
Low returns
Complex access
High risk
According to the image, which of the following is a characteristic of savings plans that could be considered both an advantage and a disadvantage?
Tax-favored
Accessible
Low risk
Interest rates are defined
What is the primary characteristic of stocks as a type of investing plan?
Represents a loan to the corporation
Signifies ownership in a corporation
Pools the savings of many individuals
Is insured by the government
Which type of investing plan is described as a fund that pools the savings of many individuals and invests this money in a variety of stocks, bonds, and other financial assets?
Bonds
Mutual Funds
Property
Retirement Plans
What distinguishes Money Market Funds from other types of mutual funds?
They guarantee a specified amount of interest
They are insured by the government
They do not guarantee a specified amount of interest and are not insured by the government
They only invest in government securities
What is a key feature of Retirement Plans as an investing plan?
They consist of cash value investments
They are controlled by the government
Employees contribute a portion of their earnings and employers may match these contributions
They signify ownership in a corporation
What type of investing plan is VUL Insurance Plans?
A type of term life insurance
A government-backed retirement plan
A type of permanent life insurance policy with a savings component
A mutual fund that invests in stocks and bonds
What is one of the advantages of investing plans according to the image?
High risk
Stress from ups and downs
Grow with the economy
Stockholders of broker companies get paid last
Which of the following is a disadvantage of investing plans as listed in the image?
Easy to buy
High Risk
You don’t need a lot of money to start
Stay ahead of inflation
According to the image, what is required due to a disadvantage of investing plans?
Minimal research
Immediate profits
Time to research
Small initial investment
What does the image suggest about the financial requirement to start investing?
Requires a large initial investment
Does not require a lot of money to start
Only profitable for large investors
Needs continuous investment
What does the term "Principal (P)" refer to in the context of calculating interest rates?
The total amount of interest paid over the life of the loan
The amount borrowed initially
The rate of interest applied to the loan
The duration of the loan in years
What is represented by the term "Interest (I)" in financial calculations?
The principal amount of the loan
The total cost of borrowing
The interest rate of the loan
The time period of the loan
How is "Time (T)" typically expressed when calculating interest for a loan?
As a percentage of the principal
In number of payments
In years or part of a year
As a fixed number regardless of the loan duration
What does "Rate (R)" indicate in the context of a loan?
The total amount of money borrowed
The number of years the loan will last
The percentage of interest that will be paid on the loan
The amount of principal to be repaid each year
What is the formula for calculating simple interest?
I = P + R + T
I = P x R x T
I = P / R / T
I = P - R - T
If you take a loan of $1,000 at an interest rate of 12% to be paid back in 12 months, what is the total amount paid back including the principal and the interest?
$1,120
$1,000
$1,200
$1,012
Using the given example, how much is the monthly interest payment for a $1,000 loan at 12% annual interest, paid back over 12 months?
$10
$12
$100
$120
What is compound interest?
Interest calculated on the initial principal only
Interest earned on the principal amount and any interest already earned
A fixed amount of interest earned annually
Interest that is calculated daily
What does the variable 'N' represent in the compound interest formula?
Net interest rate
Number of years
Number of compounding periods
New principal amount
What is emphasized as essential to understand when starting an early saving and investing plan?
The risk of investments
The power of compounding
The types of bank accounts
The rules of stock trading
What principle describes the relationship between risk and potential reward in investing?
Investment stability principle
Risk/reward correlation principle
Risk/return trade-off
Financial balance principle
Which of the following is NOT listed as an area to consider when saving and investing?
Risk Tolerance
Investment Duration
Years Till Retirement
Capability To Replace Funds
According to the example provided, what is a potential benefit of investing in a mutual fund compared to keeping money in a savings account?
Faster access to funds
Higher safety of the principal amount
Possibility of earning more money faster
Guaranteed returns
What is a risk associated with investing in a mutual fund according to the example?
Immediate loss of all funds
Decreased value depending on the economy
Fixed interest rates
Longer time to access funds
Which of the following is NOT listed as a criterion for choosing a savings or investment instrument?
Currency stability
Market risk
Liquidity
Tax benefits
What type of risk is considered when assessing the potential decrease in purchasing power due to rising prices?
Market risk
Inflation risk
Interest rate risk
Political risk
Which criterion relates to the ease and speed with which an investment can be converted into cash without significant loss of value?
Fees associated
Liquidity
Money accessibility
The minimum amount needed for investment
Which of the following is NOT listed as a tool to help you get started with savings and investing according to the image?
Local Financial Institutions
Investment Books
Apps
Financial Podcasts/Social Media Accounts
What type of financial resources is suggested by the image for beginners wanting to learn about investing?
Online Courses
Investment Websites
College Lectures
Library Books
What is the role of a Broker in the context of stocks and bonds?
A person who provides legal advice on investments.
A person who acts as a go-between for buyers and sellers of stocks and bonds.
A person who only buys stocks and bonds for personal investment.
A person who audits financial transactions related to stocks and bonds.
What does a Financial Advisor specialize in?
Managing corporate finances and bookkeeping.
Providing security and safety advice for physical assets.
Offering expertise in handling money and giving advice about saving and investing.
Conducting market research for new business opportunities.
What is a Portfolio in the context of investments?
A detailed report of a company's annual earnings.
A collection of professional certifications and qualifications.
A list of your investments and assets.
A type of savings account offered by banks.
What are Dividends?
Fees charged for financial advice.
A distribution of profits by a corporation to its shareholders.
Interest earned on government bonds.
Penalties for late payment on investment loans.
What are Capital Gains?
The initial funds used to start a business.
The total valuation of a company's stock.
The positive difference between the purchase price of a stock and its sale price.
Losses incurred from the sale of stocks.
What is meant by 'Rent from Property'?
The process of buying properties for business use.
The taxes paid on property ownership.
Creating a profit from tenants who temporarily pay to use your goods, services, or property.
The act of selling property at a higher market value.
What is the definition of "Market Costs" in the context of investment expenses?
The total cost associated with paying for financial advice.
The total cost associated with paying for marketing or distribution.
The cost incurred by the investor for managing the investment portfolio.
The fees charged by the government on investment profits.
What does "Commission" refer to in investment terms?
A fixed fee paid annually for investment advice.
A percentage of the investment's profit paid to the investor.
An amount paid to a broker based on a percentage of the broker's sales.
A tax levied by the government on investment transactions.
What are "Expense Ratios" in the context of mutual funds?
The ratio of total investment to total profit.
The percentage of returns given to the fund manager.
The annual percentage the fund takes as payment.
The initial cost paid when purchasing shares of the fund.
What is a "Load" in the context of investment funds?
A tax imposed on the total investment amount.
A fee charged when you buy or sell shares in a fund.
The cost of transferring shares between funds.
The interest paid on the borrowed funds.
What are "Advisory Fees" typically based on?
A fixed yearly payment.
A percentage of the investor's assets.
The number of transactions made.
The performance of the investment.
What is investment income primarily received from?
Salaries and wages
Dividends, interest, or rent from investments
Government subsidies
Business operations
Which of the following is NOT listed as a type of investment income?
Interest
Dividends
Capital Gains
Bonds
What is another term used for investment income according to the image?
Portfolio income
Fixed income
Variable income
Operational income
What is considered a primary goal of investment income?
To cover daily expenses
To achieve financial independence
To save for education
To succeed in savings and investing
What is the primary purpose of the stock market as described in the text?
To provide a platform for video sharing
To facilitate the buying and selling of stock shares
To offer free financial advice
To regulate government spending
According to the document, what does owning stock in a company signify?
You have voting rights in government elections
You own a small piece of that company
You are liable for the company's debts
You can manage the company
What are investors primarily hoping for when they buy and sell stocks?
To influence company decisions
To gain a profit through the movement of stock prices
To secure a job in the company
To receive regular company updates
Which of the following is NOT listed as a reason why the Stock Market exists?
Increases investment in the economy
Helps raise capital for companies
It helps create personal wealth
It guarantees financial success
Based on the example provided, what happens if the stock price increases after purchase?
You lose money
You gain more shares
You earn a capital gain
You must sell the shares immediately
What is the purpose of a high-yield savings account for teens?
it offers the highest return versus other types of investments
it gives access to investing in stocks
it offers higher interest than a standard savings account
its the same thing as a certificate of deposit
What do banks do when people deposit their money in the bank?
the bank charges their customers
the bank pays them interest to enhance their savings
the bank sends their money to a different bank
the bank refuses to take their deposits
One third of US households between the ages of 30 and 59 will have enough money for retirement by age 70.
True
False
Best way to save money
Buy a small house
Buy a boat
Buy new clothes
Buy a new car
When Lucy was born, her grandparents gave her a Series EE savings bond that will be worth $1,000 at maturity. Her grandparents paid:
$1,000 for the bond
$500 for the bond
$750 for bonding
These bonds are gifts for long term depositors
Financial advisors typically recommend an individual has enough savings to cover at least _____________ months worth of bills.
One to two
Three to six
Six to eight
12 to 18
A saving strategy that states to set aside a predetermined portion of money for saving each time a person is paid before using any of the money for spending is called? (3 word answer)
(a)
An account at a bank against which money can be withdrawn.
Income
Checking Account
Savings Account
Grant
A time-based savings goal describes ________.
how much money needs to be saved
what the money needs to be saved for
why the money needs to be saved
when the money will be saved
The process of setting aside money and putting it to work by having it earn interest or dividends or gain value in the equities market with the idea of having additional funds to use in the future is described as:
Savings and investing
Making Money
Setting goals
Diversifying
Frankie's savings account has earned a lot of interest. He wants to know if he must pay taxes on the interest earned. What would the IRS tell him?
Interest earned on savings accounts is not taxable
A sales tax will be charged on the interest earned
Savings account interest is taxable
If the interest is under $50, it is not taxable
What is the main advantage of using a Certificate of Deposit (CD) over a traditional savings account?
More frequent access to funds
Higher interest rates for fixed terms
Lower minimum deposit requirements
No early withdrawal penalties
What type of investment typically offers both high liquidity and moderate interest rates?
Stocks
Bonds
Money Market Accounts
Real Estate Investments
Which factor should be considered when evaluating the performance of a mutual fund?
The color of the fund's brochure
The fund manager's years of experience
The historical return rate
The number of advertisements
Which of the below is an employer based retirement plan that both employees and employers contribute to?
Traditional IRA
Roth IRA
401K
Pension
Which of these accounts do you set up at a brokerage firm or other financial institution?
401K
Pension
Individual Retirement Account
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.
What account is a good idea if you are in a lower tax bracket than you will be at retirement?
Traditional IRA
Roth IRA
Which type of account will your employer often "match" your contributions?
Traditional IRA
401K
Roth IRA
Pension
What does tax deferred mean?
You pay taxes when you put the money into the account and when you withdraw it.
You pay taxes now when you contribute to your account.
You pay taxes at a later date when the money is withdrawn.
The money put into this type of account has already had taxes taken out.
Pension
401K
Roth IRA
Traditional IRA
You should start saving for retirement
When you get married
When you get your first job
When you reach age 50
When you reach age 65
At what age can you start taking withdrawals from retirement accounts (401k, IRA, 403b) without penalties?
51.5
59.5
62.5
73
At what age are you required to start taking minimum withdrawals from retirement accounts (401k, IRA, 403b)?
51.5
59.5
62.5
73
Which of the following is a supplemental retirement plan for government workers?
401k
403b
Roth IRA
Trad IRA
Which of the following retirement plans can you get a loan from yourself?
401k
457b
Roth IRA
Trad IRA
How much of your 401 k can you loan yourself?
10%, $10,000 max
20%, $20,000 max
50%, $50,000 max
10%, No max
What is meant by money being ACCESSIBLE? (select all that apply)
Anyone can get it easily
The owner can get it quickly
It takes a long time to get the money
The owner can get it easily
The total amount of money you receive in a paycheck before anything is taken out is called what?
Net Pay/Income
Savings
Income Taxes
Gross Pay/Income
The highest percentage of federal income taxes collected are used for what purpose?
Military/Defense
Education
FICA (Social Security & Medicare)
National Debt
