Test Your Money Smarts

[BTravlin]

100% and I agree it's too easy.

 

[RockyMtn]

16 for 16...Pretty basic but nice to know I can handle the basics.

 

[Texas Proud]

Still taking the test.... but found that question 11 answer is wrong...


they have "Allows you to shelter retirement savings from taxation"...


Shelter means to protect from.... but all it does is defer taxation, a ROTH shelters it from taxation...


Finished... 16 of 16.... and I do not think the last few questions can be answered different than what they have...

 

[pb4uski]

Still taking the test.... but found that question 11 answer is wrong...


they have "Allows you to shelter retirement savings from taxation"...


Shelter means to protect from.... but all it does is defer taxation, a ROTH shelters it from taxation...


Finished... 16 of 16.... and I do not think the last few questions can be answered different than what they have...

In the context the questions was presented I interpreted "shelter" as synonymous with "deferral". Wikiedia's entry on tax shelters includes retirement accounts as a tax shelter, to wit:

Other tax shelters can be legal and legitimate:....

• Retirement plan. In order to reduce burden of the government-funded pension systems, governments may allow individuals to invest in their own pension. In the USA these sanctioned programs include Individual Retirement Accounts (IRAs) and 401(k)s. The contributed income will not be taxable today, but will be taxable when the individual retires. The advantage to these plans is that money that would have been taken out as taxes is now compounded in the account until the funds are withdrawn. With the Roth IRA and the newly introduced ([2006]) Roth 401(k), income is taxed before the contributions are made into the account but are not taxed when the funds are withdrawn. This option is preferred by those workers who expect to be in a higher tax bracket during retirement than they currently are. A similar system is available in the United Kingdom and is known as the Individual Savings Account.

 

[martyb]

100%. Much better than when I was in high school......

 

[sanfanciscotreat]

noproblemomon

 

[tdv2]

100%

 

[veremchuka]

We're all so smart, no wonder we FIREd!

 

[splitwdw]

14 out of 16. missed numbers 8 & 14. When I was single I picked dental insurance over disability insurance. Thought for sure a fixed rate mortgage was the right answer.

 

[sheehs1]

16 out of 16 here too.

 

[BrianB]

16 of 16. Much credit goes to the great people contributing to this web site!

 

[tmm99]

Too easy if I can ace it (I don't know much)

 

[traineeinvestor]

16 out of 16

12 was a complete guess for me since I'm not from the US.

 

[jon-nyc]

Probably goes good with beer.

Yes but even better without cheese.

 

[ducky911]

I think I would run from an advisor that bragged he passed this in his prime.

not very hard ...I think it is on a web site to sell something ...gimmick

 

[Bestwifeever]

DH missed just one and he chooses to be financially ignorant for the most part. He said he just answered with things he had heard of (he has no clue exactly what a Roth IRA is vs a traditional one, e.g., but he answered correctly with it).

It was fun to take the quiz and thanks to the OP for posting it. A perfect score and a couple of dollars will get you a cup ofDunkin Donuts coffee.

 

[Andre1969]

I only got 14 of 16, but it was my fault for rushing. I missed #2, a no-brainer, because I initially read through it too fast and thought it asked if your assets increased by $5K and your liabilities increased by $3K... when it actually asked if your liabilities decreased by $3K.

Also missed #8, which asked which mortgage would let you borrow more money, because I was thinking which mortgage I'd rather have, so I picked a fixed.

Guess I gotta pay attention more when I take these quizzes!

 

[growing_older]

It's a pretty simple test, but when tests are so simple, the test writers sometimes take shortcuts. To get net worth do you add together your assets and liabilities or subtract liabilities from assets. It depends on how you do your accounting. If liabilities are negatives, then you add them. If you convert them to positive numbers, then you subtract.

Likewise:
To reduce the total finance costs paid over the life of an auto loan, you should choose a loan with the:

• Lowest monthly payment
• Longest repayment term
• Shortest repayment term

Might be the shortest repayment term, unless of course the INTEREST RATE is much higher. Which isn't mentioned in the question at all. If the question is "all other things being equal" then it is answerable, but none of these are a reliable indicator of the less expensive loan, unless you know ALL the terms of the loan.


Similarly, question 8 about mortgages. If I have low income, then the highest loan amount I will qualify for could be a reverse mortgage, if I have sufficient equity. I think perhaps the test makers oversimplified here, too. Especially confusing if this is an AARP test, so low income and high equity might be common.


With a test this easy, what is it supposed to be testing? It's an AARP site, so maybe it's an early indicator you might need help with your finances if you can no longer score well on the test? Unclear what the objective is here. It says to take the test and see if you make the grade in your age group, but when the test is complete there is no scoring based on age group.

Since anyone can post anything so easily, there seems to be little effort to get little details right anymore.

 

[Spanky]

15/16. I goofed on the question about the different types of life insurance (whole life, universal life, and renewable term). I have never bought life insurance, so know very little about it.

+1 - no idea about the various types of life insurance.

 

[dtbach]

Missed the one on the most your could get on a loan so 15 for 16. I think I'm OK.