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 the main advantage of a Traditional IRA over a Roth IRA?
Answer: Contributions may be tax-deductible now
Traditional IRA contributions may lower your taxable income today, with taxes paid on withdrawal.
What is a 'bull market'?
Answer: A market with rising prices and optimism
A bull market is characterized by rising prices and investor optimism.
What is a 'bear market' generally defined as?
Answer: A decline of 20% or more from recent highs
A bear market is typically a drop of 20% or more from recent peaks.
Why is it risky to try to 'time the market'?
Answer: Missing the best days can sharply reduce returns
Predicting market moves is unreliable, and missing the few best days greatly hurts long-term returns.
What does 'time horizon' mean for an investor?
Answer: How long until you need the money
Time horizon is the length of time you plan to hold an investment before needing the funds.
What is inflation's effect on uninvested cash?
Answer: It erodes purchasing power over time
Inflation reduces what cash can buy over time, which is why investing helps preserve purchasing power.
What is a robo-advisor?
Answer: An automated platform that builds and manages portfolios
A robo-advisor uses algorithms to create and manage a diversified portfolio at low cost, ideal for beginners.