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Do You Have a Green Thumb?

Answer these questions to find out:

  1. John and Jane are each saving $100 a month for retirement. Both have their savings invested to earn 8 percent a year. However, Jane started saving at age 25 and John waited to start until age 45. How much more will Jane's savings be than John's at retirement (age 65)?
  2. a. Twice as much
    b. Four times as much
    c. Six times as much

  3. By saving $30 before-tax, your paycheck is reduced by ____.
  4. a. $30
    b. Less than $30
    c. More than $30

  5. Which grows faster over a long period of time?
  6. a. Money saved in a tax-deferred retirement savings account (e.g., 401(k), 403(b), or 457 plan)
    b. Money saved in an after-tax account, such as a bank savings account
    c. Money hidden under your mattress

  7. When you save money in an account that pays compound interest, you earn interest on:
  8. a. Only the money you contribute
    b. Only on the earnings of the money you contribute
    c. On the money you contribute and its earnings

  9. If you saved the price of a cup of coffee each day ($10 per week), at the end of 20 years you could have*:
  10. a. $15,000
    b. $25,000
    c. $35,000

*Assumes a 27% tax rate, saving the cost every week before income tax ($13.70) for 20 years, earning 8% annual return on your investment.

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