Investing Quiz

What is a 401(k)?

• A high-risk investment strategy

• A tax-deferred investment account

• A type of index fund

• A retirement plan offered by a company to its employees

What is the benefit of participating in a 401(k)?

• Immediate tax savings

• Ability to take penalty-free loans

• All of the above

• Conversion into an IRA upon leaving a job

What is a 403(b) plan?

• A retirement plan offered to certain educators, public employees, and employees of nonprofits

• A tax-deferred investment account

• A type of index fund

• A retirement plan offered by a company to its employees

What are the two types of individual retirement accounts (IRAs)?

• Index IRA and Mutual IRA

• Annuity IRA and CD IRA

• 401(k) and 403(b)

• Traditional IRA and Roth IRA

What is the contribution limit for traditional and Roth IRAs in 2022?

• $10,000 ($12,000 if you're age 50 or older)

• $8,000 ($9,000 if you're age 50 or older)

• $6,000 ($7,000 if you're age 50 or older)

• $5,000 ($6,000 if you're age 50 or older)

What is the earliest age you can start withdrawals from a traditional IRA without penalty?

• 70½

• 59½

• 65

• 50

What is the main advantage of a Roth IRA?

• Ability to take penalty-free loans

• Tax-free withdrawals during retirement

• Tax-deferred growth

• Higher contribution limits

What is the key to achieving success with long-term investment plans?

• Consistent contributions

• Short-term market timing

• Emotional decision-making

• High-risk investments

What is the strategy of diversification?

• Timing the market to maximize profits

• Reducing overall risk by investing in a variety of different areas

• Investing in a single stock for long-term growth

• Investing in high-risk stocks for maximum returns

What should young investors avoid when it comes to their investments?

• All of the above

• Expecting immediate high returns

• Not investing at all

• Letting emotions drive investment decisions