CFP (Certified Financial Planner) Practice Questions — All Questions

The power of compounding rewards investors who:

• a.Start saving and investing early✓
• b.Withdraw frequently
• c.Avoid all growth assets
• d.Wait until retirement to start

Starting early gives returns more time to compound.

Tax-advantaged retirement accounts generally:

• a.Are taxed more heavily
• b.Offer tax benefits to encourage retirement saving✓
• c.Cannot be invested
• d.Guarantee returns

Retirement accounts provide tax advantages to encourage long-term saving.

A key retirement-planning risk is longevity risk, which is the risk of:

• a.Dying too early
• b.Paying off a mortgage
• c.Outliving one's savings✓
• d.Markets rising

Longevity risk is outliving one's assets in retirement.

Employer matching contributions to a retirement plan should generally be:

• a.Delayed for years
• b.Captured, since they are effectively free money✓
• c.Ignored
• d.Declined

Employer matches boost savings and should generally be maximized.