April is Financial Literacy Month – our favorite month of the year.  Plus, we think everyone could use a bit of fun right now so it’s time for our annual financial literacy quiz.

When oil prices spike quickly and significantly, what is most likely to happen to the overall economy?

  • Lower inflation
  • Lower consumer spending
  • Higher bond prices
  • This is a dumb question because this will never happen
  • No idea.  I guess I need call LFS.

What happens to the cost basis of most inherited assets and why should I care? 

    • It stays the same as the original purchase price.  My heirs will pay the same income tax I would pay if I sold.
    • It resets to $0 so my heirs will pay taxes on the entire amount, not just the gain like I would pay
    • It “steps up” to whatever the market value on my date of death so my heirs have no taxable capital gains at that time
    • It is adjusted for inflation.
    • No idea.  I guess I need to call LFS.

 When inflation rises unexpectedly, what usually happens to Treasury bond prices?

    • Nothing
    • They rise of course.  That’s why I own them.
    • They fall of course  
    • They become risk-free
    • No idea.  I guess I need to call LFS.

 Which asset should I probably not transfer into my revocable trust during my lifetime?

    • My Schwab brokerage/cash account
    • My traditional IRA
    • My primary residence
    • My vacation home
    • What is a revocable trust and why are we talking about it?  I guess I need to call LFS. 

 What is my biggest long-term risk of holding too much cash?

    • I will spend it
    • My income taxes will go up
    • My purchasing power will go down if there is inflation
    • It’s harder to borrow money if I need it
    • No idea.  I guess I need to call LFS.

 

Linder Financial Services is a dba of Thayer Partners LLC, (“Thayer”).  Thayer is an SEC registered investment adviser.   SEC registration does not constitute an endorsement of Thayer by the SEC nor does it indicate that Thayer has attained a particular level of skill or ability.  This material prepared by Thayer is for informational purposes only.  It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy or investment product.  Opinions expressed by Thayer are based on economic or market conditions at the time this material was written.  Economies and markets fluctuate.  Actual economic or market events may turn out differently than anticipated.  Facts presented have been obtained from sources believed to be reliable.  Thayer, however, cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source.  Thayer does not provide tax or legal advice, and nothing contained in these materials should be taken as tax or legal advice.