Personal Finance · Level 4 of 5 · Advanced

Saving and investing

Compound growth, retirement accounts, diversification, and fees.

Study notes

Compound growth means earnings generate their own earnings over time. Starting earlier gives money more time to grow.
Workplace plans like a 401(k) or 403(b) may include an employer match. Not contributing enough to get the full match leaves money on the table.
IRAs come in traditional (possible tax deduction now, taxed later) and Roth (no deduction now, qualified withdrawals tax free) versions. Contribution limits are set by the IRS each year.
Diversification spreads money across many investments so one failure does less damage. Index funds hold many stocks or bonds at low cost.
Fees compound too. An expense ratio of 1% versus 0.05% can cost a large amount over decades.

Quiz: 6 questions

Choose one answer for each question, then check your answers. Score 5 of 6 to pass. Then enter your name and email to download a PDF certificate and have a copy emailed to you. Answers are graded in your browser.

1. Compound growth means:

Earnings themselves earn returns over time Interest is paid once Money loses value Taxes are removed

2. Your employer matches 401(k) contributions up to 4% of pay. You contribute 2%. You are:

Leaving part of the match unclaimed Getting the full match Breaking the law Paying a penalty

3. Qualified withdrawals from a Roth IRA are:

Tax free Taxed twice Always penalized Taxed at 50%

4. Diversification mainly helps by:

Reducing the damage from any single investment failing Guaranteeing profit Removing all risk Eliminating fees

5. Which costs less each year on a $10,000 balance?

An expense ratio of 0.05% An expense ratio of 1% They cost the same Expense ratios do not matter

6. Who sets IRA contribution limits?

The IRS, adjusted periodically Your bank Your state There are no limits

About this certificate: Certificates are issued by Get Certified for Free for passing a free online knowledge quiz. They are not accredited, licensed, government, academic, or professional credentials and do not confer a license. Read the full terms.