Investing quiz

Investing iconTake this quiz to see how much you know about investing. Test your knowledge.

There are ten questions. Select an answer to receive feedback. Your score is calculated at the end. 

Clock Estimated time: 5 mins

Books and appleBefore Inga starts investing what should she check?

  • Her debts are under control
  • She has appropriate insurance
  • She has set aside some money for emergencies
  • All of the above

That's right! Having a good foundation is important before starting to build wealth. 

For more information see build your wealth.

The correct answer is "all of the above". Having a good foundation is important before starting to build wealth.

For more information see build your wealth.

house on calculatorJustin is saving to buy a house in the next 2 years. What's the best way for him to save?

  • Invest in shares
  • Deposit money in a high interest savings account

That's right. Short-term investments do not have time to ride out the ups and downs of the share market. Savings accounts are a good option for short-term savings.

For more information see goals & risk tolerance.

That's wrong. Short-term investments do not have time to ride out the ups and downs of the share market. Savings accounts are a better option for short-term savings.

For more information see goals & risk tolerance.

Spices on spoonsWhich is the better example of a diversified portfolio?

  • Owning shares, keeping cash in a term deposit and owning an investment property
  • Owing shares in three different mining companies

That's right. A portfolio that includes different investment types is less likely to be affected by movements in a single market and lowers the risk of your overall portfolio.
 
See diversification for more information.

That's not right. A portfolio that includes a range of investment types such as cash, shares and property, is less likely to be affected by movements in a single market, lowering the overall risk of your portfolio.

See diversification for more information.

calculator and coinsIf Vanessa put $100 every month into a high interest savings account, earning 4% interest pa, how much would she have after 20 years?

  • $20,000
  • $24,000
  • $36,000

That's correct. Over 20 years, $100 per month could grow to over $36,000.

See savings accounts for more information and use the compound interest calculator to see how your regular savings could grow.

That's incorrect. Over 20 years, $10 per month could grow to over $36,000.

See savings accounts for more information and use the compound interest calculator to see how your regular savings could grow.

dollars and centsIf you stashed $50,000 under your bed now, what would it be worth in 20 years, taking inflation into account?

  • More than $50,000
  • $50,000
  • Less than $50,000

That's correct. Inflation increases the cost of living, meaning on average, you will need more money in the future to buy the same goods and services you buy today. Therefore your money will be worth less in the future than it is today.

To maintain your current buying power you will need to invest your money somewhere that will earn you at least as much as the rate of inflation.

See choose your investments for tips on picking a suitable investment.

That's incorrect. Inflation increases the cost of living, meaning on average, you will need more money in the future to buy the same goods and services you buy today. Therefore $50,000 today will be worth less than $50,000 in the future.

To maintain your current buying power you will need to invest your money somewhere that will earn you at least as much as the rate of inflation.

See choose your investments for tips on picking a suitable investment.

man with magnifying glassWhat should you look for when choosing a financial adviser?

  • Professional qualifications, appropriate experience and reasonable fees
  • Someone who appears very knowledgeable about the products they promote

That's correct. It's important to find an adviser who is appropriately qualified, working under an Australian Financial Services Licence (AFSL) and has experience in the areas you want help with.

For more tips see choosing a financial adviser.

That's not quite right. A financial adviser should also be appropriately qualified, working under an Australian Financial Services Licence (AFSL) and have experience in the areas you want help with.

For more tips see choosing a financial adviser.

mobile phoneMalcolm received an unexpected phone call from Tokyo offering a once in a lifetime opportunity to invest in offshore options trading, promising returns of more than 30%. He needs to act quickly as there are only limited opportunities available. What should he do?

  • Invest his money before he misses out
  • Hang up the phone immediately

Incorrect! This shows many of the classic warning signs of scams such as unbelievable returns and a need for you to sign up on the spot. Malcolm should hang up immediately and report the call to ASIC.

Get to know the warning signs of investment scams.

That's correct. This shows many of the classic warning signs of scams such as unbelievable returns and a need for you to sign up on the spot. Malcolm should hang up immediately and report the call to ASIC.

Get to know the warning signs of investment scams.

document stackWhat is a prospectus?

  • A document issued by a company that wants to raise money from investors
  • A document every company must lodge with ASIC setting out the company's plans for the next financial year.

That's right! A prospectus is a document issued by a company looking to raise money from the public by offering shares in the company. It must contain all the information you would need to make an informed decision about investing in the company, including what the company plans to do with the funds raised.

For more information see prospectuses.

That's not quite right. A prospectus is a document issued by a company looking to raise money from the public by offering shares in the company. It must contain all the information you would need to make an informed decision about investing in the company, including what the company plans to do with the funds raised.

For more information see prospectuses.

coin stackAdam and Cathy are both retired and decide to see a financial adviser. They tell their financial adviser that they are only interested in low risk products because they can't afford to lose any of their capital.

The adviser recommends a product that turns out to be high risk. A year later Adam and Cathy's original investment of $50,000 is only worth $37,500. What action can Adam and Cathy take?

  • Nothing, all investments are risky.
  • They should make a complaint

That's right! A financial adviser must give you advice that is in your best interests and appropriate for your goals and risk tolerance. Adam and Cathy should complain to the financial advice company.

If they are not satisfied with the company's response they should take their complaint to the company's external dispute resolution (EDR) scheme. EDR schemes hear complaints for free and can be a simpler alternative to resolving disputes in court.

For more information see what to look for in financial advice and how to complain.

That's wrong! A financial adviser must give you advice that is in your best interests and appropriate for your goals and risk tolerance. Adam and Cathy should complain to the financial advice company.

If they are not satisfied with the company's response they should take their complaint to the company's external dispute resolution (EDR) scheme. EDR schemes hear complaints for free and can be a simpler alternative to resolving disputes in court.

For more information see what to look for in financial advice and how to complain.

house on calculatorTrue or false, investing in property is risk free.

  • True
  • False

True! Although property is usually fairly low risk over time, it is not risk free. If the property market goes down the value of your investment will fall. Property can also be subject to liquidity risk, the risk that you won't be able to access your money quickly if you need to.

See property for more infomation.

False! Although property is usually fairly low risk over time, it is not risk free. If the property market goes down the value of your investment will fall. Property can also be subject to liquidity risk, the risk that you won't be able to access your money quickly if you need to.

See property for more infomation.


Last updated: 25 Aug 2016