Money Smarts Quiz Answer (6b)

b. invest in a mutual fund

The correct answer is: d. pay off the balance on his credit card that charges 18% interest

Most advisers suggest that before you start to invest, you should save cash for emergencies and pay down any debt you have. If Carlos has money in a savings account or buys a U.S. savings bond, he'll earn 3 to 5% on his savings. Mutual funds are not guaranteed, and they may earn or lose money. But if Carlos pays off his credit card, it's like earning 18% because that's how much he's paying now to maintain the balance. If you owe money on your credit cards, you save money if you pay off the balance in full or as quickly as possible.

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Question 6, Answer b