Personal Finance Final S1

Front

What is an IRA?

Back

An Individual Retirement Account (IRA) is a retirement account that allows individuals to make tax-deductible contributions. Investors are responsible for setting up and managing the account.

Front

Which type of account is easiest to access?

Back

Checking Account is the easiest type of account to access.

Front

What is interest in the context of personal finance?

Back

Interest is the money paid to you by a financial institution when you deposit funds there.

Front

What is the main difference between a Roth IRA and a Traditional IRA?

Back

Roth IRAs require you to pay taxes upfront on contributions, while Traditional IRAs allow tax-deductible contributions.

Front

What type of interest rates do savings accounts typically have?

Back

Savings accounts typically have low interest rates.

Front

What is a 401(k) plan?

Back

A 401(k) plan is a retirement savings plan sponsored by an employer that allows employees to save a portion of their paycheck before taxes are taken out.

Front

What is the purpose of a checking account?

Back

A checking account is designed for everyday transactions, allowing easy access to funds for payments and withdrawals.

Front

What is a Certificate of Deposit (CD)?

Back

A CD is a savings account with a fixed interest rate and fixed date of withdrawal, typically offering higher interest rates than regular savings accounts.

Front

What is the significance of compound interest?

Back

Compound interest is the interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods.

Front

What is the difference between a savings account and a money market account?

Back

A savings account typically offers lower interest rates and fewer withdrawal options compared to a money market account, which may offer higher interest rates and check-writing privileges.