Good Investment or Bad Investment?

Estimated Completion Time
1 min
Good Investment or Bad Investment?
Image: JGI/Jamie Grill/Blend Images/Getty Images

About This Quiz

In a poor economy, we think twice about every dollar we spend, every dollar we invest and every dollar we could lose. Do you have the financial know-how to pick the best investments and pass on the worst?
Which type of real estate investment is considered sound in a down economy?
shares of a new office building
purchase of a family home
In an economy that has sustained low prices and low mortgage rates, the purchase of a family home is considered a sound investment. Unlike office buildings, which show high vacancy rates, and timeshares, which offer iffy returns in the best economy, a home that you plan to use and hold for several years will likely pay off in the long term.
timeshares

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Which investment can yield more than $200,000 in 40 years?
playing the lottery
investing $25 per week in a stock portfolio
According to the Consumer Federation of America and Primerica, an investment of just $25 per week in a conservative stock portfolio can produce more than $200,000 in 40 years. The key is to find a type of investment that outstrips inflation but doesn't leave you holding the bag.
saving money in an interest-earning savings account

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Which collectible item will produce a sure profit?
classic cars
antique costume jewelry
neither
Making a profit on items like cars, stamps, coins and jewelry depends on being perfectly accurate about the public's interest in those items when you want to sell. And your costs for storing and insuring the items may outstrip potential sales value.

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How much time, on average, does it take to make money on gold?
6 months
1 year
10 years or more
It usually takes 10 years or more. The runup in gold prices started around 2001, and it took nine years for prices to reach the level they held in 1980.

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What downsides do investments in gold, art, classic cars and antiques have in common?
They incur insurance and storage costs.
They do not provide ongoing income.
both of the above
The best investments provide income each year, and to make money on any investment, you have to make sure your costs to keep an item don't outstrip your potential return.

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What are the long-term advantages of saving money in a bank passbook savings account?
The deposits are insured by the government.
You won't lose cash in volatile trading markets.
none of the above
Low-percentage returns on savings accounts tend to run lower than increases in the cost of living. In the long run, that means that for every dollar you place into an account, you may preserve 95 cents.

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Which type of life insurance provides the most predictable payoff?
term insurance
Term insurance is the most straightforward life insurance option. Other types of accounts hold the chance to earn money on payments for premiums, but often those accounts are tied to high-risk investment portfolios, and they can incur substantial administration fees.
cash value insurance
variable annuities

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Which investment is best considered with a crystal ball?
options
futures
both
Both. Investment experts describe these tools as gambling. You're not buying the stock or the commodity; you're buying the chance that they will make money.

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Which type of investment in the stock market is most likely to be a fraud?
blue chip stocks
hedge funds
low-cost stocks
Low-cost stocks, or so-called microcap stocks, sell for less than $5 per share. They are offered by companies that have shorter track records, and because those companies have lower reporting requirements to regulators, the opportunities to defraud investors are greater.

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What are the signs that a potential investment could be a scam?
a fund with detailed data showing steady annual returns that outpace the stock market
a fund that never shows a bad year
both of the above
Every investment should show poor performance at one time or another. Con artists attract investors who are skittish about losses in the stock market by showing returns that never falter.

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You Got:
/10
JGI/Jamie Grill/Blend Images/Getty Images
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