Test saving and Investing

Front

What is the Rule of 72?

Back

A formula used to estimate the number of years required to double the investment at a fixed annual rate of return. It is calculated by dividing 72 by the annual interest rate.

Front

How long will it take to double your money at a 3% interest rate using the Rule of 72?

Back

Approximately 24 years.

Front

Where can you open a savings account?

Back

At a bank or credit union.

Front

What is a 401K?

Back

An employer-based retirement plan that allows both employees and employers to contribute to a retirement savings account.

Front

Why is it important to start investing early?

Back

You have more time for your money to compound, leading to greater growth over time.

Front

Are bonds generally considered safer investments than stocks?

Back

True.

Front

What is a savings account?

Back

A deposit account held at a financial institution that provides a modest interest rate.

Front

What is a certificate of deposit (CD)?

Back

A savings product that offers a fixed interest rate for a specified term, with penalties for early withdrawal.

Front

What is a money market account?

Back

A type of savings account that typically offers higher interest rates and may require a higher minimum balance.

Front

What does compounding mean in investing?

Back

The process where the value of an investment increases because the earnings on an investment earn interest as time passes.