Savings and Investment Review Test

A key difference between saving and investing is

• Saving is for emergencies & goals, investing is for long-term wealth
• Saving is for everyone, investing is for the wealthy
• Investing has a guaranteed return, savings does not

Why is compound interest more beneficial than simple interest?

• Compound interest is hard to calculate, so fewer use it
• Fees for compound interest are greater than simple interest
• Your money grows faster when it is compounded

The rule of 72 is useful in calculating the

• time required to double an investment.
• age of money.
• interest an investor needs to earn to reach a goal.

The phrase "pay yourself first" means that you:

• Buy something for yourself before paying bills
• Donate money to a charity before paying bills
• Put money in your savings account before paying bills

Which statement below is true about mutual funds?

• mutual funds offer guaranteed returns
• you can choose which stock to include in your mutual funds
• mutual funds are diversified investments

A common mistaken belief about retirement is:

• Your retirement could last a long time.
• Saving just a Iittle bit will help.
• You will have plenty of time to start saving for retirement.

The first step in becoming financially independent

• Using credit so you can spend more than you earn
• Spending less money than you earn
• Spending ALL the money you earn

Harris is concerned about the effects of inflation on his investment returns. Which statement best describes inflation?

• The rise in general level of prices
• Fluctuations of the stock market
• Taking risk on an investment

Which investment has low risk and a low rate of return?

• Cash
• Bonds
• Stocks

What does risk mean in regard to investment?

• uncertain outcome
• certain outcome
• high rate of return