Ch.8 Finish the emergency fund: kick murphy out

Question 1

how long should it take you to fully fund an emergency fund?

Answer 1

3-6 months of living expenses

Question 2

you should make sure your emergency fund is what?

Answer 2

liquid

Question 3

what does liquid mean

Answer 3

money term that means “easy to get to with no penalties”

Question 4

what are growth stock mutual funds?

Answer 4

are investment vehicles that hold a portfolio of stocks of companies that are expected to experience rapid growth in revenue, earnings, and/or market share

Question 5

what is a certificate of deposit (CD)?

Answer 5

(CD) is a type of savings account offered by banks and credit unions where you agree to keep your money invested for a set period (the “term”), earning a fixed interest rate, and potentially facing a penalty for early withdrawal.

Similar to a savings product, similar to a regular savings account, but with a fixed term and a fixed interest rate.

Question 6

what should you look for in a money market account(s)?

Answer 6

they should pay interest equal to one year worth of CDs

Question 7

Should you invest your emergency fund into CD’s? why?

Answer 7

no; if you have to withdraw money early there’s a penalty fee.

Question 8

what is a Federal deposit insurance corporation (FDIC)?

Answer 8

is an independent agency of the U.S. government that insures deposits in banks, protecting depositors against loss if a bank fails, up to a certain limit, and also supervises financial institutions

Dave keeps his emergency money here

Question 9

What is a Roth IRA?

Answer 9

is a type of individual retirement account (IRA) that allows you to contribute after-tax money, which then grows tax-free and can be withdrawn tax-free in retirement, provided certain conditions are met.

Question 10

When should you start saving for a down payment?

Answer 10

After you’re debt free and finishing emergency fund

Question 11

what should you base your life on?

Answer 11

principles