We continue our review of personal investing concepts. Today, we will explore the reward-risk trade-off for various securities that can comprise an investment portfolio.
The trick is to find an optimal balance between risky investments and conservative investments to reach our long-term retirement goals. You shouldn't have to stick out your neck too far to get 6-9% annual returns, as we shall see.
To access the Excel spreadsheet with the scatter plot please click on this link.
To access the Word document with the scatter plot questions (12 in all) please click on this link.
You can also access the Powerpoint presentation on investing by clicking on this link.
The WHAE Personal Finance Mid-term is comprised of 2 parts:
Part 1 - 10 short-answer questions worth 7 points each
Part 2 - 1 Take-home essay question analyzing two hypothetical individuals' net income cash flows. Parts 2A and 2B are worth 15 points each. So the take-home part is worth 30 points out of 100.
Part 1 Short-answer questions deal with the following terms and topics (you should know the definitions of them all):
- the difference between wants and needs
- what is a budget?
- what are SMART goals
- what is the difference between a short-term goal and a long-term goal?
- what is the difference between net worth and net income?
- what is earned income?
- what is inflation?
- what has been the average rate of inflation in America since 1926?
- be able to provide examples of good vs bad uses of credit (i.e. debt)
- what is the difference between fixed vs variable expenses?
- What
is an emergency fund or rainy day fund?
