personal finance

Grace period

The length of time that the lender charges no interest on money borrowed when paying off your balance in the full each month.

100% of the ten-year periods in the history of the stock market have made money (T or F)

True

The difference between savings and investing is the amount of interest you earn on your money (T or F)

False

A _______ is a debt instrument where a company owes you money.

Bond

_______ are savings accounts with insurance companies.

Annuities

What is the best option if you begin losing money in your mutual fund?

Leave it alone and continue to invest money in the fund

(T or F) Diversification means to spread around.

True

(T or F) Preauthorized checking helps to build discipline in saving.

True

(T or F) If we used a race analogy to describe building wealth, it would be most like a sprint.

False

(T or F) Your first Baby Step is to pay off all of your debt.

False

(T or F) Pre-tax means the government allows you to invest money after taxes are taken out.

False

Mutual Funds

Investors pooling their money

Money Market

Place emergency fund in this type of account

Commodities

Oil and gold are examples of this

Rate of Return

The percentage by which your money grows

Murphy’s Law

Whatever can go wrong will go wrong

Sinking Fund

Use this approach instead of borrowing to purchase things

Risk Return Ratio

With investments, as the risk goes up, so should the hopeful return

Rollover

Movement of tax-deferred retirement money from one plan to another

Using the rule of 72, how long it will take your money to double at 12% interest?

6 years

The risk return ratio says:

When the risk goes up, generally the return will go up

The most aggressive mutual funds tend to be from:

Companies that are a little younger and growing

What definition best explains an IRA

The tax treatment on virtually any type of investment

What is the best thing to do with your retirement plan when you leave a company?

Do a direct transfer into an IRA

If you have 3,000 invested in a Roth IRA, what is about your contribution.

You have already paid taxes on the money so it will grow tax free

Which of the following is a risk to consider when investing?

You could lose all your money, inflation, and your money is not liquid.

Debt has been _____ to us with such intensity for so long that to imagine living without it requires a complete _____ shift, a completely new way of looking at things.

Marketed, Paradigm

A new car loses ___ of its value in the first four years. This is the largest purchase most consumers make that goes down in value.

70%

Debt consolidation

Combining multiple debts into one payment, doesn’t save you any money

Debt snowball

Pay minimum payments on all of your debts expect for the smallest one. Then, attack that one with gazelle intensity! Every extra dollar you can get your hands on should be thrown at that smallest debt until it is gone.