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Gunnar and Eloise Tackle Retirement – 4 TRADITIONAL
8.
At that age money can be withdrawn without tax penalties
ROTH
SIMPLE
SEP
9. D 10. Social Security, pension, savings 11. Contributing up to at least the maximum amount of the employer’s contribution. He has not maxed it out - his employer would match up to $2700.
Contributions are made in pretax dollars No withdrawals before 59 ½ Maximum Annual Contribution Employer Sponsored Earnings and withdrawals are tax free Earnings are tax deferred Available to freelancers Substantial IRS penalty for early withdrawal 100% employer funded
$5500
$5500
$12,500
$53,000
12. B 13. T 14. F 15. F 16. T 17. A 18. F 19. D 20. D
Stock PRODUCT PREVIEW Bonds Residential RE Commercial RE REIT Investment Grid
Gunnar and Eloise, Investors!
Mutual Fund Collectible
1. 2.
portfolio
aka equity securities aka debt securities traded on a securities exchange represents ownership in a corporation formed by pooling investors’ money learn about it before investing in it! profit subject to capital gains tax investment risk ranges from low to high like an IOU Ratings include AAA, BBB, C, etc aka debenture may be issued by a government professionally managed part of a balanced portfolio repaid at maturity date Ratings: “underperform” “outperform” issued to raise capital bought through brokerage account may provide an income stream like a basket of investments often with a specific focus can be common or preferred low liquidity
It means allocating assets to a variety of types of investments with different risk levels and within different industries so a potential loss on one investment can be offset by a gain on another. Diversification is a risk management technique. Long term savings goals are best achieved through investing. Typically, rates of return on investments are much higher than a savings account, although investing is riskier. Also he should be more specific about his financial goal, such as the net worth he wants to build. Equity (stocks = shares in a corporation such as owning stock in Netflix), bonds (debt issued by a corporation or government such as treasury bills and notes), real estate (residential such as a home and commercial such as an apartment building, shopping center, office complex, warehouse.) and cash (savings) Preferred stock because common stock does not receive a regular dividend. The lower the risk, the lower the return on the investment; the higher the risk, the higher the potential return. Yes
3.
4.
5. 6.
7.
8. 9.
4%
All bonds, whether government or
379 THE 21st CENTURY STUDENT’S GUIDE TO FINANCIAL LITERACY
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