1. Where Should You Start?

Question 1

What is the relationship between saving and investing according to the text?

Answer 1

Saving is for the poor and investing is for the rich

This statement is used in both absolute and relative terms.

Question 2

At what age did the author realize the importance of focusing on income and spending?

Answer 2

23 years old

Question 3

What financial behavior did the author exhibit despite having only $1,000 in their retirement account?

Answer 3

Spent hundreds of hours analyzing investment decisions

Question 4

What was the author’s annual investment return with $1,000 at a 10% rate?

Answer 4

$100

Question 5

What should you focus on if your expected savings are higher than your expected investment growth?

Answer 5

Saving money and adding to your investments

Question 6

What is the expected savings if one saves $1,000 a month?

Answer 6

$12,000 a year

Question 7

What example does the author use to illustrate the shift from saving to investing over time?

Answer 7

Someone who works for 40 years saving $10,000 a year with a 5% annual return

Question 8

How much total wealth does the individual have after 30 years of saving $10,000 a year at a 5% return?

Answer 8

$623,227

Question 9

What percentage of total wealth comes from investment gains by the end of the individual’s working life?

Answer 9

Nearly 70%

Question 10

What calculation helps determine where you are on the Save-Invest continuum?

Answer 10

Compare expected savings and expected investment growth

Question 11

What is the change in wealth from savings after one year for someone saving $10,000 at a 5% return?

Answer 11

$10,000

Question 12

What is the annual change in wealth from investing after 30 years for the same individual?

Answer 12

$31,161

Question 13

True or False: The author believes that investment decisions are more important for those with less money.

Answer 13

False

Question 14

Fill in the blank: If you have no investable assets, you need to focus on _______.

Answer 14

saving

Question 15

What does the author suggest should be the focus as one ages?

Answer 15

Shift from savings to investments

Question 16

What is the consequence of spending $100 regularly while having only $1,000 in investable assets?

Answer 16

Investment returns for the year are negated

Question 17

What kind of financial analysis did the author engage in despite limited funds?

Answer 17

Analyzing investment decisions with spreadsheets

Question 18

What should someone do if their expected investment growth is higher than their expected savings?

Answer 18

Spend more time thinking about how to invest what they already have