Strategy Beginner: Long-Term Investing

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1.
Which of the following weathers market downturns best, on average?
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Long-term investments. The longer you invest, the more likely you will be able to weather market downturns.
2.
Long-term investors can invest in tax shelters to reduce taxes.
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True. The savings investors get from tax-deferral expand the growth of their long-term investments.
3.
Bonds with short maturities are effective investments for long-term investors.
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False. Bonds with long maturities are effective investments for long-term investors.
4.
The ability to convert an investment into cash with little chance of loss is called ________.
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Liquidity. The more easily an investment can be converted to cash, the more liquid it is.
5.
Dividends are _______.
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Shared company profits. Dividends are investors cuts of company profits.