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Week to Wealth
If you haven’t started now, what are you waiting for? Our Week to Wealth online email course is up and running! This course will give you the skills you need to create self sustaining wealth. This week, we have another test—if you can’t get 100% right then you know what to do next. The link is below. For those of you who have already completed the course, this is a great opportunity to test your knowledge.
Question 1
Which of the following best describes the primary benefit of a High Yield Savings Account (HYSA) compared to a regular savings account?
a) It provides an opportunity for long-term investment growth.
b) It offers a higher FDIC insurance limit.
c) It allows for risk-free returns at higher interest rates.
d) It permits tax-free withdrawals for medical expenses.
Question 2
What is a key advantage of contributing to a Roth retirement account instead of a Traditional retirement account?
a) Contributions to a Roth account are tax-deductible in the year they are made.
b) Withdrawals in retirement are tax-free, provided specific conditions are met.
c) Roth accounts allow for higher annual contribution limits.
d) Employers can match contributions to a Roth account at a higher percentage than a Traditional account.
Question 3
Which of the following statements is false about the Taxable Brokerage Account?
a) It provides flexibility for medium-term financial goals like purchasing real estate.
b) Money in this account grows tax-free if used for qualified purposes.
c) It allows investment in stocks and bonds without the restrictions of retirement accounts.
d) Withdrawals typically require a waiting period of approximately three days.
Question 4
What is a unique feature of the Health Savings Account (HSA) compared to other savings and retirement accounts?
a) Contributions are only tax-free if your employer matches them.
b) It offers a "triple tax benefit," including tax-free withdrawals for non-medical expenses.
c) Funds can be used tax-free for qualifying medical expenses or act as a supplemental retirement account after age 65.
d) It allows for unlimited contributions annually.
We’ll have the answers after the break
Does this test give you anxiety already? Well if you’d like hand-on help, Hoskin Capital is here.
Answers
Question 1
Correct Answer: c): It allows for risk-free returns at higher interest rates.
Explanation: A High Yield Savings Account provides higher interest rates while still being FDIC-insured, making it an attractive option for storing cash with no risk to the principal.
Question 2
Correct Answer: b): Withdrawals in retirement are tax-free, provided specific conditions are met.
Explanation: Contributions to a Roth account are taxed in the year they are made, but both the growth and withdrawals in retirement are tax-free, assuming rules are followed.
Question 3
Correct Answer: b): Money in this account grows tax-free if used for qualified purposes.
Explanation: Taxable Brokerage Accounts do not offer tax-free growth; interest, dividends, and capital gains are taxable. They are ideal for medium-term goals but lack the tax advantages of retirement accounts.
Question 4
Correct Answer: c): Funds can be used tax-free for qualifying medical expenses or act as a supplemental retirement account after age 65.
Explanation: The HSA offers a triple tax benefit: contributions are tax-free, growth is tax-free, and withdrawals for medical expenses are tax-free. After age 65, funds can be used like an IRA for non-medical expenses, though such withdrawals will be taxed.
No one rises so high as he who knows not whither he is going.
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