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Basics Beginner: Personal Finance Basics

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1.
Which of the following questions are essential to setting financial goals?
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All of the above. All are essential to setting realistic, clear, and concise financial goals.
2.
Diversification of your investments _______.
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Can reduce risk in the market. There is no cure for market risk; diversification can reduce risk, however, though it is not guaranteed to.
3.
A financial goal that you set might fail because it was _______.
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Any of the above. These are all things that sabotage ones efforts. Thats why clear goal-setting is needed.
4.
You must always treat short-term goals conservatively.
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False. Generally, goals with short time horizons should take less investment risk; however, you must also consider your risk tolerance -- your ability to take risk if you are to meet your goals.
5.
Saving tiny amounts of money periodically is a nice idea, but is not practical.
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False. Saving small amounts periodically can be done by setting them aside and putting them into a savings or investment account, and they can grow substantially over many years.