Topic 5- Saving and Investing

What is the main difference between savings and investing?

• Savings earn higher returns than investments
• Investing is completely risk-free
• Savings are completely risk-free while investing carries risk
• There is no difference between the two

According to financial planners, what percentage of monthly net income should you save?

• 10%
• 15%
• 20%
• 25%

Which type of savings account typically offers higher interest rates than traditional savings accounts?

• Passbook savings account
• High-yield savings account
• Regular checking account
• Basic savings account

What is a Certificate of Deposit (CD)?

• A type of checking account
• A savings account with no interest
• A savings account with a specified maturity date and guaranteed interest rate
• A retirement account

Which is NOT an advantage of savings plans?

• Low risk
• Defined interest rates
• High returns
• Easy accessibility

What does owning stock represent?

• A loan to the government
• Ownership in a corporation
• A guaranteed return
• A savings account

In the formula for calculating interest, what does 'P' stand for?

• Payment
• Principal
• Percentage
• Period

What is compound interest?

• Interest earned only on the principal
• Interest earned on principal and previously earned interest
• Interest that decreases over time
• Interest paid monthly

Which investment typically carries the highest risk?

• Savings account
• Government bonds
• Stocks
• Certificates of deposit

What is a mutual fund?

• A government savings bond
• A pool of money from multiple investors used to buy various investments
• A type of checking account
• A retirement plan