Part 1 Flashcards
All savings are investments.
True/False
False. Savings do not yield high returns. Hence it is not an investment.
A mutual fund is a savings instrument.
True/False
False! It is an investment!
Savings are highly liquid.
True/False
True
If you put money into a recurring deposit, would you be saving or investing?
Saving
Income - Expenses = Savings.
True/False
False. Income minus Savings should be expenses. This would require a person to develop the discipline to first save before spending.
Income minus savings equal to expenses. What does this thumb rule mean?
It simply means that out of your monthly income, a certain percentage has to be saved before it is spent.
All Investments are savings.
Yes! The more money is saved, the more money is available for investment. Higher Savings lead to higher investments. Hence, the source of investment is savings.
Which of the following is an investment?
a. Recurring deposit in Canara Bank
b. Your own Piggy Bank
c. Buying shares of Maruti Suzuki
d. Savings bank account in HDFC Bank
c. Buying shares of Maruti Suzuki
What is the difference between needs and wants?
Wants are desires for goods and services we would like to have but do not need. Many wants may seem like needs. Needs are a special kind of want, and refer to things we must have to survive, such as food, water, clothing and shelter. Thus, need is something you absolutely cannot live without.
Which needs to be controlled - Needs or wants?
Wants.
How can you beat the inflation rate?
By looking out for investments whose returns are more than the prevailing inflation rate.
When will the real rate of return positive?
When the nominal rate of return is more than the inflation rate, the real rate of return is positive.
Fill in the quote said by Warren Buffet on saving and spending -
Do not …………. what is left after ………….., but …………… what is left after ……………
Do not save what is left after spending, but spend what is left after saving.
