Ramsey Classroom Chapter 12 Study Guide

live like no one else now, so later you can live and _____ like no one else

give

what does "bull and bear" reference?

the stock market

________ is the process of figuring out how much money you'll need in retirement and creating a plan to get there.

retirement planning

What is the fifth foundation?

Build wealth and give

when using a Roth plan, you invest your money after paying taxes, and the investment grows tax-free

True

be aware of any ________ you might receive, but don't bank on it as a key part of your retirement plan

inheritance

A security that represents part ownership of a company is called a(n) _________.

stock

Before you invest, you should make sure a mutual fund has done well for 5-10 years

True

when you're retired, you'll still have to pay taxes

True

______ is key when it comes to compound growth

Time

social security benefits are meant to _____ your income

replace 40% of

the three components of compound growth are money, time, and _______.

rate of return

roth IRA, 401(k), 403(b), 457, and simplified employee pension are all examples of _______.

retirement plans

When you invest in a mutual fund, you are contributing to a pool of money that will be.....

Invested in a mix of stocks, bonds, and money market accounts

if you're over the age of _____, you need a will

18

usually, the more liquid an asset is (like cash in the bank), the less return you can expect.

True

why might someone choose to diversify their investments

to balance high-risk investments with more steady and predictable ones

you should wait to be generous until you have money to give

False

mutual funds are less risky and can out perform the stock market because

they invest in several companies at once

its okay to borrow money from your retirement account, but don't borrow money to invest in it

False

when donating money, you should always.....

identify a cause that matters to you and research the charity thoroughly

Diversification reduces your ______ by using a mix of investment types in your portfolio

risk

when you invest, your goal is to earn a negative rate of return on investment

False

when riding the highs and lows of the stock market, remember....

it will level out so stick with it

never _____ something you don't _______

invest in; understand

never invest your money in _____ because it/they are extremely risky

single stocks

certificates of deposit and money market accounts are both examples of investments with ______ risk and ______ return

low; low

_____ is the cure for _____

Generosity; selfishness

Investing your money earns you more money because of .......

compound growth

you can build a legacy you'll be proud of by.....

giving your time and money to others

what are the keys to building wealth through investments?

To earn enough money to cover your basic needs, with some left over for saving. To manage your spending so that you can maximize your savings. To invest your money in a variety of different assets so that it's properly diversified for the long haul.

give some examples of expenses that don't go away when you retire

utility bills, property taxes, and insurance.

what are the first steps of retirement planning?

By figuring out how much money you'll need in retirement based on what you want to do, where you want to retire, how you will cover medical expenses, etc.,

what are some practical ways you can be generous today, before you're wealthy?

To help others, volunteering at places, and by giving things to others when they need something to help them.

why is a mutual fund investing a good idea for retirement, but not for your emergency fund or short-term savings?

Since in short term investments/savings you most likely won't get the returns you were expecting or hoping for. But for retirement, over time, you get more returns.

Explain how debt can hold someone back from living like no one else after retirement.

Since they can't do fun things in life and pay for things they want. The reason for this is because they are having to use their money to pay off all of the debt they put themselves into.

why is it important to be generous?

Since it makes us feel happy for doing something good and it gets rid of the negative thoughts inside of our head. Also since in life we need to do the right things so by being generous we can do that in life. Like if we see someone struggling with anything the right thing for us to do in life is to be generous and help them.

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