You have a good start on a successful career and you are ready to invest a portion of your monthly salary. Do you know enough about how to start investing to be successful? Take our quiz and make sure you are ready.
What is one important thing to remember as a beginning investor?
Make sure you have job security before you begin investing.
Start investing with a small amount that you can afford and contribute to your investment regularly.
Never start investing until all your bills are paid and you are debt free.
Every good investment plan starts with:
an interest in making money in addition to your salary
an appointment with a Certified Financial Planner
a clear statement of financial goals
You are ready to start taking steps to build an investment portfolio but first you need to:
educate yourself about investing
subscribe to a some investment journals
hire a broker that can also offer you financial planning services
If you would like to retire early, approximately how much of your income should you invest?
as much as 15 percent of your monthly salary
as much as 20 percent of your monthly salary
as much as 25 percent of your monthly salary
What else should you put in place before you start investing?
a firm financial foundation
a separate bank account solely for investment purposes
a 401K as a tax shelter for your money
Most people buy stocks for the:
dividends that they can reinvest
thrill of earning income from owning part of a company
financial security of profiting from investments
What is a good strategy for deciding which stocks to purchase?
Invest in companies that you feel will increase in value significantly within a few months.
Invest in companies that you feel sure are going to grow.
Invest in companies that are new on the market and have displayed good short-term growth.
Historically, what is the average growth of investments on the stock market?
between 6 and 10 percent
between 10 and 12 percent
between 12 and 17 percent
Although bonds are a safer investment than stocks, they:
are assessed yearly management fees
have maturity dates at least five years after issue
offer lower returns on investment
What is a huge advantage that mutual funds have over other types of investment vehicles?
instant investment diversity
low initial cost to join
management by a co-operative
What is an REIT company?
A REIT is a company that only manages rental properties.
A REIT is a company that owns and manages a portfolio of real estate properties and mortgages.
A REIT is a company that manages retirement plans for individuals and other companies.
To buy and sell stocks in the United States you will need:
to register your trading account with a stock exchange
to have a good credit score and a trading account
to choose a broker or a brokerage firm
Before you can engage the services of a broker, what piece of information will be required?
You will need to prepare a balance sheet listing your assets and liabilities before selecting a broker.
You will need to know what the minimum deposit requirement is for the brokerage account.
You will have to bring your last completed tax return with you to show the prospective broker.
How do brokers make their money?
Brokers charge a commission on each trade they make on your behalf.
Brokers charge between one and five percent of the total value of each trade.
the company of record on the shares traded will compensate brokers
What is churning?
Churning is simply another term to describe the practice of day trading.
Churning is the practice of encouraging multiple unnecessary trades.
Churning is the practice of investing in the Forex market.
What is the advantage of a younger investor having a larger share of their investment dollars dedicated to stocks?
Stocks have less long-term risk and a better return on investment over time.
A younger investor has a lot of time to trade up to better performers.
Young investors tend to worry less when a stock they own suffers significant loss.
When investing in stocks, what is a good basic strategy that seems to make a great deal of sense?
“Get in cheap and get out quickly with a profit.”
“Don’t roll the dice, take good advice.”
“Invest aggressively for the long-term and conservatively for the short term.”
What strategy should you employ if you want to remove a lot of the guesswork out of investing?
invest only in mutual funds
use dollar-cost averaging
hire a Certified Financial Planner
What is very important advice for any budding investor?
You must stick with your investment strategy.
You can beat the odds by sticking with only mutual funds.
Try to become proficient at estimating the future performance of your stocks.
What is a final piece of good advice for any investor?
Always reserve a small portion of your liquid assets for short-term investment in the next hot sector.
A change of course is not bad if it is obvious that a part of your plan is not working.
Have a Certified Financial Planner review your plan with you every three years.