Dave Ramsey Quiz
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The amount of money you save depends on how much money you earn. Simply put, you will save more when you earn more.True or False
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False
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A savings account at your bank is the best place to put your emergency fund. True or False
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False
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The two biggest factors in compound interest and building wealth are time and the initial amount of the investment. True or False
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False
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It is okay to use your emergency fund to pay cash for big purchases such as a TV or a cell phone. True or False
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False
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You should pay yourself first before you pay bills. True or False
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True
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Saving money for a purchase and letting the interest work for you rather than against you
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Sinking fund
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Money is neither good nor bad
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Amoral
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Emergency fund goes here
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Money market
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Interest on interest
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Compound interest
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If it can go wrong, it will; unexpected events
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Murphy's law
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Baby step 1
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$500/$1000 in an emergency fund
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Baby step 2
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3-6 months of expenses
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Key to wealth building
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Discipline
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For most people, a fully-funded emergency fund will be about
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$10000-15000
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Ben and Arthur illustrate which principle of saving
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Compound interest
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Baby steps 1 and 3 have to do with
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Saving and emergency fund
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You should save for
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emergency fund, purchases, and wealth building
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How many baby steps are there
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7
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Saving is about contentment and
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Emotion
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The following is true about PACs
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Stands for Personal Account Coordinator and Pre-Authorized Checking
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The saving habits of Ben and Arthur help to illustrate the principle of compound interest. True or False
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True
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Dave's 80/20 rule says when it comes to money, 80%is head knowledge and 20% is behavior. True or False
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False
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Your income level greatly affects your savings habits. True or False
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False
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Interest is money paid to a saver by a financial institution. True or False
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True
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The correct order for using your money is pay bills, save, then give. True or False
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False
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Why do you think the United States has a negative savings rate?
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Advertising and marketing
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Calculate the compound interest for the problem: $1000 at 6% interest for three years. FV=PV(1+r/m)^mt
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1191.02
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Calculate the compound interest for the problem: $500 at 18%for four years. FV=PV(1+r/m)^mt
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969.39
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Calculate the compound interest for the problem: $1500 at 12% for two years. FV=PV(1+r/m)^mt
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1881.60
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What are the three primary savings goals?
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Purchases, emergency fund, wealth building
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Why do you need an emergency fund at your age?
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To stay out of debt
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Why do you need to have $1000 in the bank before paying off debt?
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So you don't have to borrow money
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Growth and income funds
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Large cap
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Always check this record when investing
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5-10 year track record
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Spread around the risk
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Diversification
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Piece of ownership in company stock
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Share
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List of your investments
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Portfolio
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Least liquid of all investments
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Rental real estate
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Degree of uncertainty of the return on an investment
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Risk
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Aggressive growth funds
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Small-cap
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Savings account within an insurance company
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Annuity
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Risk goes up, return goes up
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Risk return ratio
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Liquidity means to spread around and lower risk. True or False
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False
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A single stock is the best place to keep your emergency fund. True or False
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False
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A CD is the best place to keep an emergency fund. True or False
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False
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Diversification lowers your risk with investing. True or False
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True
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Commodities and futures are extremely speculative and carry a high risk. True or False
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True
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_____% or any 10-year period in the stock market has made money
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100
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Long-term investments properly diversified include the following mutual funds
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Growth, growth and income, international, aggressive growth
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What is the KISS rule of investing?
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Keep it simple stupid
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What are examples of bad investments
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Gold, viaticals, futures
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What is true about liquidity?
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The more liquid an investment, the less return
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What is not a type of annuity? Fixed, stable, variable.
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Stable
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A savings account with a certificate is a
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CD
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Why do you look at the long-term track record with a mutual fund?
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So you have a better idea of what to expect
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What are some investments that don't give you a high rate of return?
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Single stocks, gold, CDs, bonds
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List four types of investments that you should always avoid.
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Gold, commodities, day trading, viaticals
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How are single stocks different from mutual funds and which is the better investment?
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Mutual funds will diversify. Mutual funds are the better investment
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Retirement plan for self-employed people
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SEPP
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Grows tax free
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Roth IRA
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They typical retirement plan found in most corporations
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401K
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Used for college savings
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ESA
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The typical retirement plan found in non-profit groups such as schools and hospitals
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403B
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Pre-tax means the government is letting you invest money before taxes have been taken out
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True
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Savings bonds are a good way to save for college
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False
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Never borrow money from your retirement plan
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True
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When you leave a company, don't move your money from the retirement account
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False
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An IRA is a specific type of investment
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False
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The _____ IRA grows tax free
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Roth
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An educational savings account is used for
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College
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Which of the following is not a retirement plan? 529, 401K, 403B, 457
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529
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What is not a benefit of the Roth IRA?
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Unlimited contributions
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If your company provides a 100% match up to 6%, how much should you personally contribute to your 401K if you earn $35,000?
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$2100
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If you contribute $2300 to your 401k and your company matches up to 3%, how much is in the account?
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$4600
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What should you do with your retirement accounts when you leave a company?
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Direct transfer
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Never save for college using
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Pre-paid tuition and savings bonds
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Baby step 5 is
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College funding
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If carol and joe are debt free, how much should they be investing in retirement plans if their combined income is $145,000
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$21,750
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What are the advantages of Roth IRA?
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Tax-free
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What is baby step 4 and why does your emergency fund have to be fully funded before you being this step
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Invest 15%. So you don't have to borrow money
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What are some ways you can avoid student loan debt if you do not have a college fund?
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Scholarships, work study
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Why should you take a 401K match before you start a Roth IRA?
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Companies will match your money with a 401K
