Send the link below via email or IMCopy
Present to your audienceStart remote presentation
- Invited audience members will follow you as you navigate and present
- People invited to a presentation do not need a Prezi account
- This link expires 10 minutes after you close the presentation
- A maximum of 30 users can follow your presentation
- Learn more about this feature in our knowledge base article
Test Your Investing Instincts
Transcript of Test Your Investing Instincts
A. Make sure you're well diversified, then stand pat.
B. Move everything into cash and bonds.
1. The stock market takes a sudden dive. What should you do?
A. Long-term investors should keep at least 70% of their investments in stocks and stock funds. Spread your stock money over several types of companies -- large and small, EU and foreign. Resist the urge to put all of your money into bonds and cash.
A. Pull all your money out -- you don't want to lose any more.
B. Leave your accounts alone and stop making further contributions for now.
C. Buy while stocks are cheap.
C. Remember the saying, "buy low, sell high?" Well, a market slump is an opportunity to do just that. Prices are down, but they won't stay down forever. Look for solid companies likely to make a comeback when the economy revives.
2. The market has been in the dumps for months. What's the smartest move?
B. A company stock
C. A stock mutual fund
C. Mutual funds are like a box of chocolates -- they give you variety in one package. Your returns aren't tied up in the fate of one company because each stock fund owns several stocks.
3. Which of these investments offers you the most diversification?
A. Sweet deal! Funnel as much money in there as you can.
B. Good deal! But be mindful of how much money you tie up in the company.
C. Bad deal! Steer clear of the offer altogether.
B: Don't put all your eggs into one basket. You shouldn't tie up more than 10% to 15% of your savings in one company, especially when that company is also your employer. If things turn south for the business, you could lose your nest egg and your job. Contribute up to that limit, then diversify your money elsewhere for safety.
4. As an employee, your company allows you to buy shares of its stock at a 15% discount. Your employer also kicks in a match on your investment.
B: This is a smart investment strategy. It won't boost your returns -- for the best returns you need to buy low and sell high. But because it's nearly impossible to time the market, dollar-cost averaging is the next-best thing. It takes the emotion and guesswork out of investing, smoothing out the market's ups and downs.
5. So-called "dollar-cost averaging" -- investing a fixed amount at set intervals of time -- is for...
A. Stick with it. After all, you have a history together.
B. Consider cutting it loose.
B: Those are two key signs you should reevaluate your investment. Research the new manager's record. And ask yourself if the new style of investing fits with your overall portfolio's plan. If either doesn't match your needs, cut the fund loose. Loyalty means nothing.
6. You've invested in a particular fund for years, and it has done fairly well. You receive notice that the fund manager is leaving, and the new manager will change the way the fund invests. You...
A. Smart move.
B. What was I thinking?
B: Chasing big returns is often a losing game because the good times don't last forever. You'd have to know the right time to sell -- but no one knows for certain when a sector's had its run. The best investing strategy is a well-diversified one.
7. Tech stocks are hot. You change your allocation from 10% to 80% of your portfolio.
A. Diversified stock mutual fund
B. Bank CD (certificate of deposit)
C. High-yield online savings account
C: Your best option here is the high-yield savings account because it's protected and your money is accessible. Bank CDs are safe, but your money is locked up for a fixed period of time. Stock mutual funds are accessible but can lose a lot of money in fairly short order. And those losses are not insured.
8. You're looking for a super-safe place to stash your emergency savings. You turn to a...
A. Leave them alone.
B. Start dialing down your risk.
C. Move completely out of stocks.
B: Now's the time to shift some of your money to more conservative investments -- but not all of it. With a short time frame, you'll want to keep about 60% of your money in stocks, and move about 40% of it to more conservative investments, such as bonds. The idea is to start preserving some of your money while maintaining the potential for growth.
9. You've always invested for the long-term, keeping about 90% of your money in stocks. But you plan to retire within the next five years. What should you do with your investments?
B. Not so fast...
B: Just because you own a lot of funds doesn't mean you're well-diversified. Check your funds for overlapping investments. Often, funds that invest in the same type of securities, such as big-company growth stocks, own many of the same names.
10. You own 20 mutual funds, so you figure you're well-diversified.
Test Your Investing Instincts
Results: .............. out of 10