Strategy Beginner: Automatic Savings and Investment Plans

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
An automatic savings plan withdraws money from an existing savings or checking account on a periodic basis and deposits it into another account.
Choose wisely. There is only one correct answer.
True. The period is usually monthly or weekly.
2.
A good way to determine how well you can afford to participate in an automatic savings plan is to find out where you are spending money needlessly in your budget.
Choose wisely. There is only one correct answer.
True. This can become a new source of funds for you.
3.
Automated transfers of money between two accounts require that those accounts be from two different institutions.
Choose wisely. There is only one correct answer.
False. You can set up an automated transfer between two accounts at the same institution.
4.
An advantage of using an automatic investment plan to fund a retirement account is that it can benefit from compounded earnings as it grows.
Choose wisely. There is only one correct answer.
True. Most retirement plans benefit from compounded growth of earnings.
5.
If you are averse to risk and you want to save money for a purchase three months from now, why would a savings account be a good choice to put your money into?
Choose wisely. There is only one correct answer.
It has a low risk of loss. This may make it an ideal choice.