Smart Investing: Where are you now



Part 1 – Please answer each of the following questions.

1. A growth mutual fund would be an excellent way to save for short-term goals.

a) true

b) false

c) don’t know/not sure

2. One should pay off credit card debt before starting an investment program.

a) true

b) false

c) don’t know/not sure

3. Diversification of one’s investment portfolio reduces overall exposure to risk.

a) true

b) false

c) don’t know/not sure

4. In general, investments that are riskier tend to provide higher returns over time than investments with less risk.

a) true

b) false

c) don’t know/not sure

5. What is a reasonable average annual return that can be expected from a broadly diversified U.S. stock mutual fund over the long run?

a) 5%

b) 10%

c) 15%

d) 20%

e) don’t know/not sure

6. If you buy a company’s stock…

a) you own a part of the company

b) you have lent money to the company

c) you are liable for the company’s debts

d) the company will return your original investment to you with interest

e) don’t know/not sure

7. If you buy a company’s bond…

a) you own a part of the company

b) you have lent money to the company

c) you are liable for the company’s debts

d) you can vote on shareholder resolutions

e) don’t know/not sure

8. Which type of bond is the safest?

a) U.S. Treasury bond

b) municipal bond

c) corporate bond

d) don’t know/not sure

9. In general, if interest rates go down, then bond prices…

a) go down

b) go up

c) are not affected

d) don’t know/not sure

10. Over the last 20 years in the U.S., the best average returns have been generated by:

a) stocks

b) bonds

c) CDs

d) money market accounts

e) precious metals

f) don’t know/not sure

11. A “no-load” mutual fund is one that…

a) carries no fees

b) carries no sales charge

c) does not contain high-risk securities

d) has no limits on the period of time in which it can be bought or sold

e) don’t know/not sure

12. Mutual funds allow investors to diversify even small amounts of money.

a) true

b) false

c) don’t know/not sure

13. Which of the following best explains why many municipal bonds pay lower yields than other government bonds?

a) municipal bonds are lower risk

b) there is a greater demand for municipal bonds

c) municipal bonds can be tax-free

d) don’t know/not sure

14. A Section 529 Plan is a tax-advantaged way to save for

a) college

b) retirement

c) long-term health care

d) don’t know/not sure

15. Which of the following is true about a Roth IRA?

a) contributions are made with “before-tax” earnings

b) withdrawals during retirement are taxed

c) you are not required to withdraw your money at any age

d) don’t know/not sure

Part 2 – Please indicate how satisfied you are with the following.

| |Very Satisfied | | | |Very |

| | |Satisfied |Not Sure |Dissatisfied |Dissatisfied |

|My knowledge of investments |_____ |_____ |_____ |_____ |_____ |

|My confidence in making investment decisions |_____ |_____ |_____ |_____ |_____ |

|My ability to discuss investing with other family members|_____ |_____ |_____ |_____ |_____ |

|and/or financial professionals | | | | | |

Part 3 – Please check “yes” or “no” to indicate which of the following actions you have taken.

Yes No

|I have assessed the adequacy of my savings to meet a financial emergency. |_____ |_____ |

|I have developed an investment philosophy and assessed my tolerance for taking risks. |_____ |_____ |

|I make a point to read articles on finances and investing in the newspaper, magazines, books, or on the Web.|_____ |_____ |

|I’ve done a “ballpark estimate” of the savings I’ll need when I retire. |_____ |_____ |

Part 4 – Please check the following categories that pertain to you.

|Age |_____ Under 30 |

| |_____ In my 30s |

| |_____ In my 40s |

| |_____ In my 50s |

| |_____ In my 60s |

| |_____ 70 or over |

|Type of Household |_____ Single (widowed, divorced, never married) |

| |_____ Married |

|Education |_____ Less than high school degree |

| |_____ High school degree |

| |_____ Beyond high school |

| |_____ College degree (Bachelor’s degree or higher) |

|Household Income |_____ Under $40,000 |

| |_____ $40,000 -- $80,000 |

| |_____ Over $80,000 |

| | |

|How did you learn about this class? |_____ radio |

| |_____ newspaper |

| |_____ information from the library |

| |_____other:____________________________ |

| | |

|Mother’s maiden name |_______________________________________________ |

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Smart Investing:

Where Are You Now?

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Prepared by C.N. Fletcher and P. Swanson, HDFS Extension, Iowa State University, Ames, Iowa for the Smart investing @ your library® project with the Ames Public Library. October, 2008.

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