personal finance final

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102 Terms

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collection of multiple investments in different assets to meet your personal financial goal
portfolio
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selling shares of stock for more than you originally paid
capital gain
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investing is foolish because Jesus is coming soon
false
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which need to do before you invest
Pay all bills on time

Pay off credit cards every month

Meet basic needs
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which need to do before you invest 2
Save up for emergencies

Get health insurance

Contribute to your employer retirement plan
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fundamental principle of investing
start early
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market risk is
The risk that the entire economy may lose value
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inflation risk is
The risk that your money loses purchasing power
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regulatory risk
The risk that the company you invested in becomes illegal
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liquidity risk is
The risk that you can't get your money out quickly and easily
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which of the following is stock market truth
The market is the most effective wealth building tool
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which is another stock market truth
The market is volatile but trends upwards
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dollar cost averaging is
Buying the same dollar amount of stocks every month
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diversification
Spreading out your investments to reduce risk
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herd behavior is
The tendence for investors to act as a group
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market timing is
Trying to buy low and sell high
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how did stock market start
1600s colonial shipping companies sold ownership in ventures
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What does IPO stand for?
Initial Public Offering
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a stockholder is
Part owner of the company that offered the stock
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a stockholder makes money if
They sell the stock at a higher price than they bought it
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what is a corporation
A legal entity that is registered to do business
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true of public traded company
Shares are bought and sold on a public exchange
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which of the following is true of privately traded company
The common investor can’t invest without a relationship with the company
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why may companies chose to go public
To acquire capital
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which is reason to invest in stocks
So you can have ownership without liability
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common stock is
The most basic form of stock ownership
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preferred stock is
A fixed dividend per share no matter the stock price
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a bond is
A loan to a company from investors with a maturation date
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understanding stocks
random walk theory
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beta analysis is
A measure of volatility relative to other stocks
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fundamental analysis is
Evaluating how valuable a company is really
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technical analysis is
Predictions about a stock regardless of intrinsic value
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random walk theory proposes
The future performance of stocks is completely unpredictable
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corporate earnings
a companys profits
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earnings per share
Measurement of profit on a per share basis
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cash dividends refer to
Income you receive from owning a company
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book value refers to
The net worth of the company
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how are corporate earnings useful in stock analysis
If earnings are strong investors are hopeful that will continue and grow
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company annual report
A brochure highlighting company achievements over the last year
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how is company annual report beneficial for stock analysis
It gives you insight into the recent history of the company
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company prospectus
A report required by law about financial status and risks
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how is company prospectus beneficial for stock analysis
It can give you an idea of the company’s financial status and risks
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practice trading in stock market risk free
www.wallstreetsurvivor.com
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why is short-selling fundamentally risky
Losses can (hypothetically) be infinite
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which are types of bonds
junk, treasury, corporate
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why do investors have more bonds and less stocks as they near retirement
Bonds typically are less volatile & have a more reliable return than stocks
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mutual fund
A mix of securities that help investors diversify
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actively managed funds have more fees than passive ones
True
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annual expense ratio
How much the broker charges you to manage a fund
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what is load
A fee to buy or sell shares in a mutual fund
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difference between mutual fund and ETFs
ETFs trade during open trading hours
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advantage of mutual funds and ETFs
Diversification

Automatic reinvestment of income and gains
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not advantage of mutual funds
Flexibility of choosing individual stocks
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which of the following is a reason to chose unmanaged index funds
Dart throwing monkeys perform as well as professional investors
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objectives of mutual funds
Income, growth, social responsibility
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good brokerages
Vanguard, Betterment, Fidelity
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real estate cash flow
Rental income after paying operating expenses
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speculator
Someone who buys an asset hoping it will appreciate
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real estate investing is not a great fit for some people
It can be very time consuming and stressful
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over-leveraged
Having too much debt so you can’t weather downturns
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real estate is a way to get rich quickly
false
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better wealth building strategy in real estate
Buying and holding
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elements of successful real estate investing
Research and vet deals thoroughly

Get good systems and partners in place

Set up a limited liability company
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not one of the Rs in BRRR
Return on investment
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good reason to consider buying investment property
Property often appreciates in value
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reason to invest in real estate
Returns can sometimes be very high
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which is true of investing in collectibles
Only invest in collectibles you're truly an expert on
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which is true of investing in gold
It's not great for building wealth but it's not terrible for storing wealth
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tax-differed growth
Earn money, pay taxes later
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pension
A guaranteed payment from the company during retirement
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how many post-earning retirement years do you need to prepare for
30 years
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how much money need to replace 40,000/year income for 30 years
1,000,000
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3 ways build good retirement fund
Good markets, compound interest, and time
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what percent of your income should you save for retirement
15%
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philosophy wise when considereng work in retirement
Plan ahead so you can choose to work or not
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retirement fund contribution
Money I put into my retirement account along the way
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retirement fund distribution
Money I get from my retirement account when I retire
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vesting is when
I take ownership of money my employer puts into my retirement
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portability means
I can move my retirement to another account without getting taxed
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automatic enrollment
When you employer automatically signs you up for a retirement account
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automatic escalation
When your employer automatically increases your contributions
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Monte Carlo simulation
A statistical analysis of the probability of your retirement amount
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main Dif between Roth IRA and traditional IRA
In a Roth IRA, you pay taxes first and your investment grows tax free
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what’s the highest percent withdrawal from your investments and you could live on them forever
4%
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which can interfere with saving for retirement
Lifestyle inflation

Short-term thinking

Borrowing from your 401(k)

Paying for your kids’ college instead of retirement

Forced early retirement

Living longer than expected
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when do minimum requirement distributions start for 401K
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retirement fund beneficiary
The person who gets your retirement account if you die
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**If you don’t have money when you retire, you’ll have to keep working, depend on your kids, or possibly end up homeless.**

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true
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social security
Government funded insurance for old age
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**At what age can you claim social security with full benefits?**

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67
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**If you wait until age _____ to claim social security, you get 8% more per year.**

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72
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**Which of the following is a good strategy for saving for retirement?**

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Automatically deposit into a retirement fund before anything else
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health care proxy
Someone who can make medical decisions for someone else
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power of attorney
Someone who can make legal and financial decisions for someone else
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executor
Someone who makes sure someone’s final wishes are carried out
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**What is the process called when someone dies without a will?**

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Intestate
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**Which of the following is a real reason someone should rewrite their will?**

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if you move to a new state
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**A will should be kept in a deposit box at the bank.**

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false
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probate
A court supervised process to transfer assets from a decedent to heirs
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legal way to avoid probate
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Joint tenancy with right of survivorship