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Stocks 101: Stocks versus Other Investments

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1.
A good way to minimize the effects of bad timing in stock choices is to invest for the short term.
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False. A good way to minimize such effects would be to invest for the long term instead, since volatility tends to iron itself out over time.
2.
Which of the following skills sets is NOT needed to be a successful investor?
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Advanced statistics. Understanding advanced statistics is not needed to be a successful stock investor. The vast majority of people have all the basic skills required.
3.
Over the long term, which investments provide the lowest real (inflation adjusted) returns?
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Savings accounts. Savings accounts provide the lowest real (or inflation adjusted) returns over the long term.
4.
Which of the following investments provide the biggest long-term returns?
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Stocks. Of the types of investments listed, stocks provide the biggest long-term returns. In attempting to reach your financial goals in life, maximizing the return on your investment dollars is key.
5.
Which of the following investments are the most volatile in their pricing?
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Stocks. Stocks are the most volatile. Over the long term, stocks have a higher return than bonds or savings accounts. But this volatility means that over the short term, other types of investments may significantly outperform stocks.