Choose wisely. There is only one correct answer to each question.
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1.
Which of the following is not a good reason to sell an investment?
You need the money. Before you invest in stocks or funds, make sure you have an emergency stash in an easy-to-access savings or money-market account to cover unexpected car repairs or sudden unemployment.
2.
It may be a good idea to sell an investment if it does not live up to your expectations. But before you sell, it's a good idea to _______.
Compare the investment to an appropriate benchmark. Doing so will give you some needed perspective on the underperformance. You might also compare it to its industry peers or a suitable index.
3.
Let's say you're investing for retirement in 25 years. You decide to use some of those saved-up retirement dollars for a new goal: paying for part of your 15-year-old nephew's college education in three years. What should you do to your portfolio?
Consider selling some of the long-term securities and investing the proceeds in shorter-term investments to fund your new goal. Because your goal has changed, your portfolio should, too. In this case, you need to sell some longer-term investments and invest in shorter-term fare.
4.
Which is the most effective strategy for long-term investors?
Sticking with a good long-term investment. It's too difficult to trade in and out of an investment as its price changes, and just because an investment rises 25% does not necessarily mean it's ready to peter out.
5.
If the price of one of your investments drops, the most rational thing to do may be to keep it.
True. It may even be a good idea to buy more of it.
