Unit 6 Test: Investing Strategies & Exponential Functions

An actively managed mutual fund

A diverse collection of stocks and bonds

An index of the 500 largest publicly-traded companies in the world

An index of the 500 largest publicly-traded companies in the US

Robo-advisors use an algorithm to automate the investing process

Robo-advisors generally have lower fees than a traditional financial advisor

Robo-advisors generally invest your portfolio based on your goals and risk tolerance

Robo-advisors generally have a higher account minimum than a traditional financial advisor

The budgeting software Alberto uses to make sure he has enough saved every month

The person who selects which stocks to include in the fund

A CEO at one of those midsize companies

The website where Alberto logs in to check his fund’s value

Who will manage the account

The location of the brokerage company

Your investing goals

Fees that will be charged

Half stocks and half bonds

Her TDF allocation will depend on the specific securities she selects

Majority stocks and a small percentage of bonds

Majority bonds and a small percentage of stocks

A Roth IRA

A traditional IRA

A pension plan

Social Security

A lot of high fees, because there are only 30 companies in that index

Your fund manager to contact you on a regular basis with suggestions on whether to buy or sell

To outperform most other investors because of the elite status of this index

Your returns to track the performance of 30 large US companies

Fees are typically set at 10 to 15%, annually, of the amount you have invested

You’ll only pay fees to your fund manager if your portfolio has a return over 5%

You’ll pay a one-time fee when you start your investment portfolio with a mutual fund

Fees, compounded over the life of your investment, can substantially decrease your returns

Target date fund

Exchange-traded fund

Robo-advisor

Mutual fund

Alpine Target Retirement 2060 Fund

Alpine Target Retirement 2065 Fund

Alpine Target Retirement 2070 Fund

Alpine Target Retirement 2075 Fund

Lump Sum Investing

Average Paycheck Investing

After Tax Averaging

Dollar-Cost Averaging

Fund a savings account, because it will guarantee an interest rate, rather than leaving his retirement up to a risky investment option

Fund a traditional IRA, because it will offer him, by far, the best tax advantages

Fund a 401(k) because his employer is offering a match, up to 3% of his salary

Fund neither account, because $100 does not meet the minimum requirements for any retirement account type

Researching the long term growth strategy of a company

Buying cryptocurrency because you saw a headline about it reaching its highest price ever

Buying a stock when it has hit its lowest price of the year

Buying stock in an industry that is not represented in your portfolio to increase diversity

How old you are when you start investing

Whether you qualify for Social Security benefits

What percent of your income you invest each month

How often you log into your online brokerage account

A Roth IRA, because she can pay taxes on the money now and take it out tax-free later

A regular brokerage account, because tax advantages don’t matter that much

Social Security, because she will pay into it throughout her career

A traditional 401(k), because it will reduce her taxable income now

3

4

10

27

Function a

Function b

Function c

Function d

The assets managed by index funds have grown by approximately 14.91% per year

The model is not a good fit for the data points because the r2 value is close to 1

A linear regression model would likely have a higher r2 value

The model predicts that US index funds will manage approximately $1.7 trillion in assets in 2023

x=2

x=3

x=4

x=5