TODAY | July 24, 2013
>>> this morning on investing 101, your retirement plan from roth iras to 401(k)s, it can be overwheling. he is going to test our smarts with a quiz. we'll be competing with the help of two interns. good morning everybody.
>> good to see you.
>> is that with a you call it? test the knowledge? i call it crushing the spirit.
>> who is ready.
>> first of all, it is very confusing when you sit down and say where do i put me money, how do i make sure my future is solid?
>> it s. there's a lot of options. we have options. i get confused. it's easy to be confused so hopefully we can cut through the confusion and go through basic terms but in a format that does include soul crushing. i'm pulling for clare.
>> let's get the gavel. we're ready.
>> okay. question. i give you multiple choice if you think you know the answer i want you to break the podium. here we go. question number one and i'm ready for press your luck part two when they return. invented in 1978 this plan is a staple for american retirement investing. pension, b, 503 b, c, 401(k).
>> c is correct.
>> 1,000 points, or 1 point. whatever. 5.17 points. all right. question two. investing in a roth ira maybe a smart choice for, a retirees, b, lower to middle income families, c, wealthy families.
>> b is correct. lower to middle income families designed for people who will make more later in life. they can invest over a certain amount if you make over 180,000 as a family you are barred from the roth ira . 1,000 to 1,000 . question 3. life insurance that can be used as an investment and that has a cash value is known as a, whole life. b, term life, c, long-term.
>> a is right. whole life.
>> you can take loans against it. you guys are getting a little ague aggressive on the gavel there.
>> you told us.
>> fair enough. fair enough.
>> i like this role. here we go. if you are under 50 years old, the maximum amount pretax you can contribute to a 401(k) plan this year is a, 5,000, b, 9,999, c, 17,500.
>> corbin and al.
>> that is correct. 17,500. if you're over 50 1/2 you can invest more.
>> if you're my age, you can forget it.
>> you're half dead.
>> this is the tie breaker.
>> this is my favorite question. i'm skipping ahead. it's going to test your math skills brown university . let's see if you can get this right.
>> i'm a humidity major.
>> perfect. if at 30 years old, you have $5,000 invested in stocks and contribute nothing else ever again. so 5,000 at 30 years old and you get an average sock market return --
>> come on.
>> i like this.
>> come on vanderbilt. 5,000 at 30, you get an average return of just 8% but nothing else is put in. when you turn 65 you will have saved on that 5 grand, a 8,000, b 45,000, c 25,000?
>> 5,000 at 30. nothing else --
>> a is right. the magic of compound interest. if you get 8% a year.