Investment Flashcard

Front

What is one benefit of starting to invest money at a young age?

Back

Interest compounds over time.

Front

If Marcus invests in an account that yields 8% growth annually, how long will it take for his investment to double?

Back

10 years

Front

Which savings option would BEST meet the criteria for saving $500 to buy a new bicycle in the next five months: No risk, FDIC insured, accessible funds, low fees, and no required minimum balance? Options: A money market mutual fund, A certificate of deposit, A bank savings account, A money market savings account

Back

A bank savings account

Front

Do not usually require a minimum balance. Indicate whether this characteristic describes money market savings accounts, traditional savings accounts, or both.

Back

Traditional Savings Accounts

Front

Insured by the FDIC: Money Market Savings Accounts, Traditional Savings Accounts, or Both?

Back

Both

Front

Allow ATM withdrawals and check writing

Back

Money Market Savings Accounts

Front

What is the benefit of diversifying investment portfolios with a variety of high- and low-risk investments?

Back

maximizes returns while decreasing the overall volatility of an investment portfolio, ensures consistent returns regardless of market fluctuations, prevents investors from making reactionary decisions during bear markets

Front

What is the benefit of exchange-traded funds (ETFs) over mutual funds?

Back

ETFs typically have very low expenses while mutual funds have higher fees because they are more actively managed.

Front

Why is purchasing bonds an attractive investment option?

Back

Bonds pay a fixed rate of return.

Front

A freelancer wants to build an emergency fund but is concerned that his income is inconsistent and is based on projects he gets to work on. What advice will be best for him to achieve his goals most efficiently?

Back

Save unexpected tax refunds and birthday cash gifts.