Week 2: Maximizing Income

Question 1

ROI (Rate of I…)

Answer 1

Dollar amount gained from original principle

Question 2

Rate of Return

Answer 2

Percentage amount gained from original principle

Question 3

TDF (Target Date Fund)

Answer 3

• ## Risk level automatically changes from high risk to low risk

Question 4

Income

Answer 4

The money you receive in exchange for providing a good or service or through investing capital

Question 5

Single underline income

Answer 5

Labor

Question 6

Double underline income

Answer 6

Asset classes

Question 7

High income is a

Answer 7

Tool for building wealth

Question 8

Capital

Answer 8

Is the asset that can be used/leveraged to grow wealth. You leverage something to get something in return.

Question 9

What asset class would a financially literate person focus more on

Answer 9

Have investments in all four of them— diversification

Question 10

What are the four asset classes?

Answer 10

Cash
Fixed Income
Alternative Investment
Equities

Question 11

Political capital v social capital

Question 12

Two types on income

Answer 12

Active and passive

Question 13

What is passive income and what are examples

Answer 13

Your capital grows wealth for you

Capital gains (profit from selling/ developing an asset)
Inheritance
Social Security
Pension Payments (retire payment)

Question 14

Mutual fund vs index funds

Answer 14

Mutual funds= actively managed with higher fees
- allows investors to pool their money to purchase shares in a diversified portfolio (high risk than index fund)
index Funds= equity investment following a group of stocks with similar characteristics
- lower risk because its a larger slice of the pie

Question 15

How to maximize active income

Answer 15

1. Professional identity: present yourself in such way that employers want to hire, promote, and retain you.
2. Know your market value:
3. Brave enough to negotiate: to increase your income
4. Ask about COLA trends

Question 16

Maximize income in your personal expenses

Answer 16

zero based budgeting= name dollars/ track spending
Direct deposit

Question 17

Fixed Income

Answer 17

Pays investor a set return for a set number of years and returns principle after a number of years
- bonds and annuities

Question 18

Bonds

Answer 18

Not equity
A government issued investment that provides a set rate of return for a set period, and pays back the original principle

Question 19

Annuities

Answer 19

Generally for retirees
Offer a guaranteed income stream. Doesn’t change, and you know you’re going to get it.

Question 20

What are the two types of Cash

Answer 20

CDs (Certificate of Deposit) and Govt issued T-Bill (treasury bill)

Question 21

Certificate of Deposit (CDs)

Answer 21

A cash investment tool that locks up a selected amount of money and pays a set return for a set duration. guaranteed by the bank

Question 22

Government issued T-bill

Answer 22

Issued investment offering a guaranteed need return if the consumer allows the tool to mature in full.