Money Smarts Quiz Answer (9a)

a. a savings account at the bank

The correct answer is: c. a mutual fund that invests in stocks

As you read in the answer to question three, over the long term, stocks have earned more money than any other investment. Since Bob doesn't need his money for a long time, he can afford to take on the risk of investing in stocks. Even if the stocks in his fund go up and down in value, chances are his savings will grow in value over the long term. He lessens the risk of losing money by choosing a diversified mutual fund rather than the stock of one company.

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Question 9, Answer a