It’s April which mean it’s Financial Literacy Month

And time for our annual financial literacy quiz! 

As a reminder, financial literacy is defined as the ability to understand and effectively use financial skills and tools, which include personal financial management, investing and budgeting.  Ongoing financial education of ourselves, and our children/grandchildren, is considered the backbone of financial literacy so we are furthering the cause by providing some fun and educational questions for you. 

Spoiler alert, some of these questions refer to prior “Bernie’s Blog” posts, so feel free to look back as needed.  Some questions have more than one right, or wrong, answer. 

1. Where should I keep my emergency fund?

a. In 10 coffee cans in my backyard, to ensure proper diversification

b. In my checking account so I can get to it easily when I need it

c. In an online high yield savings account or short-term bond fund

d. In a high growth ETF for tax efficiency

e. No idea. Better call LFS

2. Why are my 2021 Required Minimum Distributions (RMDs) higher than I planned for?

a. What’s a required minimum distribution?

b. Because I/LFS did a lousy job planning

c. Because I didn’t take a RMD in 2020

d. Because the stock market ended 2020 at a record high

e. Because the government needs my tax dollars

3. How should I prepare for these higher RMDs?

a. What’s an RMD?

b. Sell the bonds in my IRA

c. Get a new accountant

d. Adjust my tax withholding

e. No idea. Better call LFS

4. When interest rates rise, what happens to bond prices?

a. They go up

b. They go down

c. They stay the same

d. They get indexed to bitcoin

e. No idea. Better call LFS