Dave Ramsey Quiz

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