Dave Ramsey Ch. 12 Lesson 3 PDF Questions, Cheat Sheet of Economics

Download Dave Ramsey Ch. 12 Lesson 3 PDF Questions and more Cheat Sheet Economics in PDF only on Docsity! 1. What is an IRA? What is the difference between a traditional IRA and a Roth IRA? (3 points) - Traditional IRA lets you invest pre tax, money grows tax deferred. Will have to pay taxes on it later. - Roth IRA grows tax free, and lets you invest post tax. 2. What is the similarity between a 401K and a 403B? What is the difference? (2 points) - 401 k companies can allow their companies to save for retirement - 403 Nonprofits can allow their employees to save for retirement. - Both let you build a retirement and help you build wealth. 3. What does 401K/403B "matching" mean? (2 points) - Companies will match the amount of money you put it to a certain percentage, this means that it is free money they give you. 4. What does Dave mean when he says that IRAs and 401Ks "protect" your investments? (3 points) - Protects mutual funds from taxes. 5. What is diversification and why is this important for retirement? Be specific in your responses. (5 points) - Diversification lowers risk and by having your money spread out you do not have to depend on one person/company.