Ch.4 Money Myths; The (non) secrets of the rich Flashcards
what are the two biggest myths?
Risk denile and easy wealth
why is gold a poor track record?
It isn’t used when the economy collapses
what attracts the brightest business minds?
the Stock market
why is Cash value life insurance one of the worst products?
due to cost, you will purchase much less than you need with the excess payment having poorer returns than could be had in reasonable investments
what is a cash value policy?
is a type of permanent life insurance that includes a savings component, allowing policyholders to accumulate cash value over time, which can be accessed through loans, withdrawals, or surrendering the policy
Is owning a trailer good financially?
No; they go down in value overtime making your chances of wealth building less and less than if you had a rental
why are prepaid funerals and college expenses bad?
they give low rates of return and put money in the other guys pocket
What is a mutual fund?
is a way for investors to pool their money together to invest in a variety of assets like stocks and bonds, managed by professionals, offering diversification and potentially higher returns
How does a mutual fund help you?
it can help invest more back into your pocket
what is the only thing that can be cleaned from your credit report?
only inaccuracies; divorce decrees don’t have the power to take your name off credit cards and mortgages.
are collectors your friend?
NO
do you spend less if you use cash?
yes
What should you know about Auto and homeowner insurance?
Choose higher deductibles to save on prelims
what is a deductible?
the amount of money that the insured person must pay before their insurance policy starts paying for covered expenses
what is a prelim?
a document or process that’s not yet final and is used for planning or preliminary analysis, such as a preliminary financial statement, a preliminary financing plan, or a preliminary prospectus
what should you know about life insurance?
purchase 20yr level term insurance that’s equal to 10x your income
Term insurance is…
cheap
Why shouldn’t you use life insurance as a place holder to save money?
They have massive premiums
What should you know about Long Term Disability?
Best place to get it is from work, usually you get coverage that equals 50%-70% of your income
what should you know about health insurance?
Health savings account (HSA) is a great way to save on prelims. It allows you to save for medical expenses
when should you buy Long-Term care?
if over 60, buy it
normal =
broke
