Understanding Savings and Investments

What are the main types of investments?

• Stocks, bonds, real estate, mutual funds, ETFs, cash equivalents

• Commodities

• Cryptocurrency

• Art collections

What is KiwiSaver and how does it work?

• KiwiSaver is a health insurance program for New Zealand citizens.

• KiwiSaver is a retirement savings scheme in New Zealand that involves contributions from employees, employers, and the government.

• KiwiSaver is a type of fruit grown in New Zealand.

• KiwiSaver is a government tax scheme for businesses.

What is a term deposit?

• A term deposit is an investment in stocks for a short duration.

• A term deposit allows withdrawals at any time without penalties.

• A term deposit is a type of savings account with no fixed interest rate.

• A term deposit is a fixed-term investment where money is deposited for a set period at a fixed interest rate.

How does investing in shares differ from other investments?

• Investing in shares offers ownership in companies with potential for high returns and higher risk, unlike more stable investments like bonds or real estate.

• Investing in shares guarantees fixed returns like savings accounts.

• Shares are less risky than investing in commodities or currencies.

• Investing in shares requires no knowledge of the market or companies.

What is a savings account?

• A savings account is a type of loan that requires monthly payments.

• A savings account is an investment account that only allows stock trading.

• A savings account is a checking account with no withdrawal limits.

• A savings account is a deposit account that earns interest and is used for saving money.

What is the difference between simple interest and compound interest?

• Simple interest grows exponentially; compound interest grows linearly.

• Simple interest is calculated on the total amount; compound interest is calculated on the principal only.

• Simple interest is calculated on the principal only; compound interest is calculated on the principal plus accumulated interest.

• Simple interest is always higher than compound interest over time.

If you invest $1,000 at a simple interest rate of 5% per annum, how much interest will you earn in 3 years?

• $75

• $200

• $100

• $150

If you invest $1,000 at a compound interest rate of 5% per annum, how much will you have after 3 years?

• 1157.63

• 1000.00

• 1200.00

• 1300.50

What is the formula for calculating simple interest?

• Interest = Principal ÷ Rate × Time

• Interest = Principal + Rate + Time

• Interest = Principal × Rate × Time

• Interest = Rate × Time

What is the formula for calculating compound interest?

• A = P (1 + r)^t

• A = P (1 + r/n)^(nt)

• A = P (1 + r/n)^(n)

• A = P e^(rt)