Ramsey Classroom Chapter 12

Replace 40% of

Social Security benefits are meant to ________ your income.

False

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

It will level out, so stick with it!

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

Identify a cause that matters to you and research the charity thoroughly.

When donating money, you should always . . .

To balance high-risk investments with more steady and predictable ones.

Why might someone choose to diversify their investments?

Rate of return

The three components of compound growth are money, time and _________________.

Time

______ is key when it comes to compound growth.

True

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

Low; low

Certificates of deposit and money market accounts are both examples of investments with __________ risk and __________ return.

Risk

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

True

When you're retired, you'll still have to pay taxes.

The stock market

What does "bull and bear" reference?

Compound growth

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

Giving your time and money to others

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

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

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

Inheritance

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

Generosity; selfishness

_______ is the cure for ________.

Retirement planning

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

True

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

They invest in several companies at once.

Mutual funds are less risky and can outperform the stock market because . . .

False

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

Retirement plans

Roth IRA, 401(k), 403(b), 457, and Simplified Employee Pension are all examples of ______________.

Invest in; understand

Never _____ something you don't _____.

Build wealth and give.

What is The Fifth Foundation?

Give

Live like no one else now, so later you can live and ____ like no one else.

False

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

Stock

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

18

If you're over the age of ___, you need a will.

False

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

Single stocks

Never invest your money in ______ because it/they are extremely risky.

The keys to building wealth is money, time, and the rate of return.

What are the keys to building wealth through investments?

Some expenses that don't go away when you retire are utility bills, taxes, groceries, gas, and even vacation.

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

The first step to retirement planning is dreaming big and writing down the things I want in my retirement. The next step is figuring out how much money I need to live that lifestyle and sketch out a financial plan accordingly.

What are the first steps of retirement planning?

Some ways I can be generous are by leaving positive notes on peoples car windows, writing thank you notes, and volunteering.

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

Mutual funds are good for retirement because they take a lot of years to grow and increase your rate of return. They are not a short term investment because the rate of return would be very low and would not be a good source of money for a emergency fund.

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

Debt can hold someone back from enjoying retirement by causing them added stress of paying off that debt before they die so their family won't have to pay it. It can also cause a person to never go on the vacation of their dreams because they wanted a house they could not afford. Debt can also cause a person to continuously have to work hard at the 9-5 job until they die, instead of having a much-needed break. Therefore debt is simply a restructuring of dreams.

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

It is important to be generous to others because if you were having a bad day or a normal day, you would want that generosity shown to you. Generosity causes you to feel the happiness that you give to others. Through generosity, the quality of day-to-day life could be improved. It is important to be generous because one kind act can cause a ripple effect of kindness. Generosity is something that can change a whole person's day, week, month, or year depending on the type of generosity shown.

Why is it important to be generous?