Starting Investment Flashcards
7 cards from real Investment practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Starting Investment flashcards as text
What is typically the first step before making any investment?
Answer: Building an emergency fund
An emergency fund covering 3-6 months of expenses protects you from selling investments at a loss during a crisis.
Which account offers tax-advantaged retirement savings in the U.S.?
Answer: Roth IRA
A Roth IRA allows after-tax contributions to grow tax-free, making it a popular retirement vehicle.
What does 'dollar-cost averaging' mean?
Answer: Investing fixed amounts at regular intervals
Dollar-cost averaging invests a fixed amount regularly, reducing the impact of market volatility.
Why is starting to invest early beneficial?
Answer: Compound growth has more time to work
Starting early gives compound returns more time to multiply your wealth.
What is a low-cost way for beginners to diversify?
Answer: Investing in an index fund or ETF
Index funds and ETFs hold many securities, giving instant diversification at low cost.
What is an employer 401(k) match?
Answer: Free money the employer contributes based on your savings
An employer match adds free money to your retirement account, so contributing enough to get the full match is wise.
Before investing, why should you pay off high-interest debt first?
Answer: The guaranteed savings often exceed expected investment returns
Paying off high-interest debt like credit cards offers a guaranteed return that usually beats market gains.