IRA 031103 Go to www.fool.com

Select the ‘home’ tab on the bar across the top of the screen. Select ‘Fool School’ tab on the right end. Find the 13 steps to financial independence. Describe, 10 words or less, each of the following of the 13 steps:

  1. Settle your finances (5 words):

  2. Index funds (6 words)

  3. Discount brokerage (4 words)

  4. Plan for retirement (9 words)

  5. Get financial info (2words)

     

  6. What does IRA stand for? (3 words): ________________ _______________ __________

  7. How is a Roth IRA taxed? Vs a Traditional IRA? (6 words or less)

  8. What are the criteria to have a Roth or Traditional IRA? (2 words).

  9. Can kids have an IRA? (hint see question #8 above; 1 word) ______________

  10. What is the minimum age to start an IRA? (hint see quest #8,9; 1 word) ________

  11. Can a family have more than 1 IRA? (hint see quest #8,9,10; 1 word) _______

  12. Who in the family should have an IRA? (HINT: See question #8,9,10,11; 3 words)

  13. What is "compound growth"? (call your bank or accountant friend; 5 words)

     

  14. How much ‘nest egg’ must one have to reach 1million dollars in 63 years, if the APR is 10%? (Use the ’rule of 70’).

Rule of 70 (aka ‘72’) is a commonly used equation to estimates the ‘doubling time’ for a population. (population can be cockroaches, bacteria, OR dollars in a ‘nest egg’!!) all you have to know is the ‘growth rate’. For cockroaches growth rate is in days; for bacteria - minutes; dollars - usually annual – as in APR, i.e. the interest rate that a savings account earns). Doubling time – the amount of time required for the population to double in size.

Example: Housefly growth rate is 22% per day. 70/22 = 3 days… every 3 days the population of houseflies DOUBLES! Start w/ 100 house flies: in 9 days how many?

100*2 = 200 * 2 = 400 * 2 = 800

on the: 3rd day… 6th day… 9th day. – you started w/ 100 and by 9th day have 800.

Equation: _70_ = approximate doubling time. Show your work J

APR