Chapter 11 section 1 quiz saving and investing answers

You should start saving receipts and tracking expenditures for all possible tax deductions and tax credits. In short, a tax deduction reduces the amount of income on which you are taxed, whereas a tax credit reduces the amount of tax that you owe. Give Yourself a Break Budgeting and planning can seem full of deprivations. Make sure you reward yourself now and then. Setting up an account at a brokerage and spending a few hundred dollars on a certified public accountant CPA or a financial planner —at least once—might be a good way to jump-start your planning.

Personal Finance Skills The key to getting your finances on the right track is using skills you likely already have. Three key skills are finance prioritization, assessing the costs and benefits, and restraining your spending. Finance Prioritization: This means that you can look at your finances, discern what keeps the money flowing in, and make sure that you stay focused on those efforts. Assessing the Costs and Benefits: This key skill keeps professionals from spreading themselves too thin.

Ambitious individuals always have a list of ideas about other ways that they can hit it big, whether it is a side business or an investment idea. While there is a place and time for taking a flier, running your finances like a business means stepping back and honestly assessing the potential costs and benefits of any new venture.

Restraining Your Spending: This is the final big-picture skill of successful business management that must be applied to personal finances. Time and again, financial planners sit down with successful people who still manage to spend more than they make. Personal Finance Education Personal money management isn't one of the most popular topics in educational systems.

You can learn everything you need to know for free online and in library books. Almost all media publications regularly dole out personal finance advice, too. Online Blogs Reading personal finance blogs is a great way to start learning about personal finance. Money Mustache has hundreds of posts full of insights on escaping the rat race and retiring early by making unconventional lifestyle choices.

CentSai helps you navigate myriad financial decisions via first-person accounts. Million Mile Secrets and The Points Guy each teach you how to travel for a fraction of the retail price using credit card rewards. Investopedia offers a wealth of free personal finance education. You might start with our special sections on budgeting , buying a home , and planning for retirement —or the thousands of other articles in our personal finance section.

Free Online Classes If you enjoy the structure of lessons and quizzes, try one of these free digital personal finance courses: Morningstar Investing Classroom offers a place for beginning and experienced investors alike to learn about stocks, funds, bonds, and portfolios.

These courses will teach you how credit works, which types of insurance you might want to carry, how to maximize your retirement savings, how to read your credit report, and what the time value of money is. This basic course is good for beginners who want to learn about personal financial statements and budgets, how to use consumer credit wisely, and how to make decisions about cars and housing.

The most important thing is to find resources that work for your learning style and that you find interesting and engaging. If one blog, book, course, or podcast is dull or difficult to understand, keep trying until you find something that clicks.

The economy changes, and new financial tools like the budgeting apps mentioned earlier are always being developed. Find resources you enjoy and trust, and keep refining your money skills through retirement and beyond. Human nature can often derail the best intentions to achieve a perfect credit score or build a substantial retirement nest egg. These three key character traits can help you stay on track: Discipline One of the most important tenets of personal finance is systematic saving.

Ideally, the first step is to establish an emergency fund or perhaps a tax-advantaged health savings account HSA. To be eligible for a health savings account, your health insurance must be a high-deductible health plan HDHP. Establishing an emergency fund takes financial discipline—without it, giving in to the temptation to spend rather than save can have dire consequences.

In the event of an emergency, you may not have the money to pay the expenses—leading you to finance them through debt. Average retail investors tend to do better by setting an investment target and abiding by it rather than buying and selling stocks trying to time the market. A Sense of Timing Timing can be crucial. For instance, imagine you're three years out of college, have established your emergency fund, and want to reward yourself. The opportunity cost of buying a personal watercraft can be illustrated through the time value of money.

Thus, delaying the decision to invest wisely may likewise delay the ability to reach your goal of retiring at age Doing tomorrow what you could do today also extends to debt payment. Emotional Detachment Personal finance matters are business, and business should not be personal. A difficult but necessary facet of sound financial decision-making involves removing emotions from a transaction. Making impulsive purchases feels good but can significantly impact long-term investment goals.

So can making unwise loans to family members. Your cousin Fred, who has already burned your brother and sister, will likely not pay you back, either. The smart thing to do is decline his requests for help—you're trying to make ends meet also. The key to prudent personal financial management is to separate feelings from reason.

However, when loved ones are experiencing real trouble, it pays to help if you can—just try not to take it out of your investments and retirement. Many people have loved ones who always seem to need financial help—it is difficult to refuse to help them. If you include planning to assist them in real emergencies using your emergency fund, it can make the burden easier. Breaking Personal Finance Rules The personal finance realm may have more guidelines and tips to follow than any other.

Although these rules are good to know, everyone has their own circumstances. Here are some rules prudent people, especially young adults, are never supposed to break—but can break if necessary. However, while being fiscally responsible is important and thinking about your future is crucial, the general rule of saving a given amount for retirement may not always be the best choice, especially for young people just getting started. For one thing, many young adults and students need to consider paying for their biggest expenses, such as a new car, home, or postsecondary education.

This rule is one of the easier ones to justify breaking. Adapting to changing markets can be the difference between making money or limiting your losses and sitting idly by and watching your hard-earned savings shrink. Short-term investing has its advantages at any age. The idea of diversification is an important part of creating a strong investment portfolio; this includes both the riskiness of individual stocks and their intended investment horizon.

At the other end of the age spectrum, investors near and at retirement are encouraged to cut back to the safest investments—even though these may yield less than inflation —to preserve capital. Taking fewer risks is important as the number of years you have to earn money and recover from bad financial times dwindles, but at age 60 or 65, you could have 20, 30, or even more years to go.

Some growth investments could still make sense for you. What Is Personal Finance? Personal finance is the knowledge, instruments, and techniques used to manage your finances. When you understand the principles and concepts behind personal finance, you can manage debt, savings, living expenses, and retirement savings. If you decide to invest in the Milewski Corp. To determine if you made a good investment you should: 1. Check the Bond Rating 3. Now, they trade local stocks and better meets the needs of smaller companies.

Few OTC stocks pay dividends. Most are small and new companies 17 Bull v. Bear Bull market — when stocks are strong and stock prices are rising Bear Market — when stock prices are falling 18 Measuring the Market Question: How do you know if stock market is a bull or a bear? Journal 30 pt. Quiz 18 III. B -notes on market investment strategies IV. If gold six months from now is lower, you make money.

If the price of gold is higher, you lose money. Most are associated with livestock and farm products. Put option — the right to sell a share of stock at a specific date and price in the future. Money market — where money is loaned for less than one year. Primary market — a market where only the original issuer can repurchase or redeem a financial asset. Secondary market — is a market in which existing financial assets can be resold.

Finance companies, life insurance companies, pension funds, and real estate investment trusts are examples of nonbank financial institutions.

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In our Learning Center , you can see today's mortgage rates and calculate what you can afford with our mortgage calculator before applying for a mortgage. Home Equity Line of Credit You might be able to use a portion of your home's value to spruce it up or pay other bills with a Home Equity Line of Credit. Auto Chase Auto is here to help you get the right car. Apply for auto financing for a new or used car with Chase. Use the payment calculator to estimate monthly payments.

Morgan offers insights, expertise and tools to help you reach your goals. Provide financial protection for the family or beneficiaries of the insured. People buy insurance and if they die the money is paid to their survivors to make up for lost income. The companies lend out part of the premiums that they collect to investors F. Pension Funds: income some retires after working a certain number of years or reaching a certain age III.

Sharing Risk 1. Diversification: spreading out investments to reduce risk 2. Providing Information: 1. They do the research and can look at the past to help you make decisions with your money C. Providing Liquidity 1.

Liquidity: the ability to convert and asset into cash a. Easy to cash out and get money. Liquidity, Return and Risk A. Liquidity and Return 1. There are trade-offs to consider when investing a. You need to consider how quickly and easily you want to get your money. Savings account can access it whenever c. CD may allow you to access it but if it is before maturity you will be a penalty i. But a CD has better interest so you can make more money B.

Return and Risk 1. You must consider the degree of risk involved in an investment 2. You may be able to make more money, but you also have the ability to lose all or some of your money.