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WorksheetsInvesting for Retirement Review
Total questions: 33
Worksheet time: 25mins
Name
Class
Date
1.
Investment strategies that allow you to pool your money together with other investors to purchase a collection of stocks, bonds, or other securities that might be difficult to recreate on your own.
a)
Mutual Fund
b)
Index Fund
c)
Exchange Traded Fund (ETF)
d)
Target Date Fund (TDF)
2.
Which type of retirement account is an investment option for ANYONE entering the full-time workforce regardless of what career they choose?
a)
Traditional IRA
b)
Pension
c)
401(k)
d)
Social security
3.
A government program that pools contributions from current workers to then provide retirement support benefits to those who are eligible.
a)
Traditional IRA
b)
Pension
c)
401(k)
d)
Social security
4.
A retirement savings and investing plan that employers offer, gives employees a tax break on money they contribute.
a)
Traditional IRA
b)
Pension
c)
401(k)
d)
Social security
5.
This describes an investing strategy where you pay a fund manager to try to beat the market.
a)
Active Investing
b)
Passive Investing
6.
The spreading of risk among many types of investments to reduce overall risk with a small reduction in return.
a)
diversification
b)
inflation
c)
investing
7.
A rise in the general level of prices.
a)
diversification
b)
inflation
c)
investing
8.
It is important to have 3 to 6 months worth of expense in liquid savings before you start to invest.
a)
True
b)
False
9.
It is a good idea to have a diversified investment portfolio to reduce your overall risk.
a)
True
b)
False
10.
Savings bonds are low risk investment but offer a high rate of return.
a)
True
b)
False
11.
Social Security’s full retirement age is currently at age 70.
a)
True
b)
False
12.
When a company is formed, its owner(s) decide whether it will be privately held or publicly traded. The company remains in that category for the rest of its lifespan.
a)
True
b)
False
13.
IRA contributions are not always tax-deductible.
a)
True
b)
False
14.
In retirement, it’s common to rely on income from all of the following sources EXCEPT...
a)
Social Security
b)
Pension Income
c)
Paycheck from Employer
d)
Investment Income
15.
Which of the following statements is TRUE about the state of retirement in the U.S.?
a)
Most Americans are able to retire early
b)
Retirees are able to support themselves on Social Security payments alone
c)
The majority of employers offer pension plans for workers
d)
Many people may need to invest to build wealth and to support themselves in retirement
16.
All of the following are advantages of a 401(k), EXCEPT
a)
You don’t pay taxes on your investments’ growth each year.
b)
You can get immediate access to your money in the account.
c)
Your employer may match some of your 401(k) contributions.
d)
You can contribute up to $19,500, which is more than the limits for an IRA.
17.
Which of the following describes a Roth IRA?
a)
A retirement account anyone can open that you fund with money that you’ve already paid taxes on, so it grows tax-free.
b)
A mandatory deduction out of your paycheck to provide retirement support benefits from the government,.
c)
An employer-sponsored plan that you contribute some of your salary to before taxes. Your employer may match contributions.
d)
An employer-sponsored plan that pays out a set amount every year after you’ve reached retirement age.
18.
Which statement best describes what Social Security is and how it works?
a)
Social Security is a optional payroll deduction for current workers who then receive the retirement benefit on an annual basis.
b)
Social Security is an optional program to allow retirees to continue contributing to their individual retirement accounts.
c)
Social Security is a government program that pools contributions from current workers to then provide retirement support benefits to those who are eligible.
d)
Social Security is a federal health insurance program for retired workers.
19.
How can you invest for retirement if your employer does not offer a 401(k) plan?
a)
You simply wouldn’t be able to invest
b)
Open a 401(k) from a relative’s employer
c)
Open an Individual Retirement Account
d)
Open a 501(c)(3) instead
20.
How much of your income do experts recommend investing in a 401(k) account?
a)
5%
b)
7%
c)
10%
d)
15%
21.
Which are the following is NOT a solution presented to fix the Social Security shortfall?
a)
Stop distributing benefits to workers who do not pay into the system
b)
Reduce benefits to match income from payroll taxes
c)
Increase the Social Security tax rate
d)
Raise the age of retirement for younger workers
22.
Which of the following is TRUE about pension plans?
a)
More nonunion workers have access to pension plans than union workers
b)
How much an employee gets from a pension depends on how long they’ve worked for the employer and how much they earn
c)
Employees generally control the investments within a pension plan
d)
Pension plans are becoming increasingly common among employers in the U.S.
23.
Sanjana is explaining what Social Security is to her younger brother. Which of the following descriptions should she use?
a)
Social Security is a type of retirement savings plan that you can open through a brokerage firm
b)
Social Security is a government program that pools contributions from current workers to then provide retirement support benefits to those who are eligible
c)
Social Security is a type of retirement savings plan offered by some employers
d)
Social security is a government mandate that requires employers to offer their employees a 401(k) or pension plan
24.
What is a bond?
a)
A type of loan you can get from the federal government that you pay back with interest
b)
An investment in which you loan money to a corporation or government and are paid back with interest and the principal that you originally lent to them.
c)
A type of loan you can get from a bank that you pay back with interest
d)
An investment in which you loan money to another individual and are paid back with interest
25.
All of the following are reasons to invest, EXCEPT…
a)
To minimize the impact on inflation, which causes you to lose purchasing power
b)
To earn a consistent rate of return with lower risk than typical savings accounts
c)
To build wealth by reinvesting your returns and allowing them to compound
d)
To earn higher average rates of return than you would in a typical savings account
26.
Which of the following statements BEST describes investing?
a)
Putting $100 per month into an FDIC-insured bank account for short-term goals
b)
Buying and selling stocks within the same day to take advantage of short-term price variation
c)
Reducing the purchasing power of your money over time
d)
Buying assets, like stocks, with the intention to hold them and grow your wealth over the long term
27.
An investor can best harness the power of compounding by doing all of the following, EXCEPT…
a)
Making frequent trades
b)
Starting to invest early
c)
Reinvesting earnings
d)
Minimizing risk
28.
How are active investing and passive investing different?
a)
Active investing requires a hands-off approach while passive investing requires a hands-on approach
b)
Active investing typically has lower fees while passive investing typically has higher fees
c)
Active investing requires you to make a minimum number of trades per day while passive investing does not
d)
Active investing is typically done by a fund manager trying to beat the market while passive investing typically involves investing in a popular index like the S&P 500
29.
What are the two ways investors can earn money from a stock?
a)
Dividends and interest
b)
Dividends and selling the stock at a higher price than they bought it
c)
A fixed interest rate on the investment and selling the stock at a higher price than they bought it
d)
A fixed interest rate on the investment and decreasing the stock’s market cap
30.
Which of the following statements about dividends is TRUE?
a)
Dividends are earned when you sell your shares for a higher price than when you bought them
b)
Dividends are typically set between $20 and $30 per share
c)
Dividends cannot legally be reinvested in the same company where they were earned
d)
Dividends are usually paid quarterly by well established publicly traded companies
31.
Which type of retirement account is an investment option for ANY young person?
a)
Traditional IRA
b)
Pension
c)
401(k)
d)
Social security
32.
All of the following are best practices to use when evaluating a mobile investing app EXCEPT…
a)
Understand what your goals are for using the app
b)
Create an account first, then conduct research on the company behind the app
c)
Read through customer reviews about the app
d)
Find out what customer service and educational services the app provides
33.
Capital gains taxes
a)
Are taxed the same no matter when you sell them
b)
Are usually higher than income taxes
c)
Only apply to the richest 1% of investors
d)
Are taxed differently depending on if you sell them before or after holding them for 12 months
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