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Portfolios 504: The Investing Pyramid

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1.
Why is setting your saving and spending rate more important in the investing pyramid than investment selection?
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It helps you cope in the event of a shortfall in your investments.
2.
For saving for your long-term goals, advisors usually recommend starting out with stocks and holding them over the long term rather than switching eventually to safer investments.
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False. Advisors usually recommend shifting to safer investments over time in order to protect the wealth you have built up.
3.
What activity forms the base of the investment pyramid?
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Setting goals. The other activities will be greatly influenced by your goal setting.
4.
Once you're retired, you won't need to adjust your spending rate.
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False. Market downturns and unexpected expenses can necessitate adjusting your spending rate.
5.
Asset allocation means _______.
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Dividing your portfolio among stocks, bonds, and cash investments. Although there is some truth to the other options, this one is the basic definition of asset allocation.