Quiz Financial Truth Or Bunk? Round II By the editors of Kiplinger's Personal Finance Updated January 2015 iStockphoto Here are 12 money maxims you've heard time and time again. But does the advice point you in the right direction or lead you astray? Round II of our quiz will see if you can tell. (In case you missed it, try the first round of our quiz, too.) Start Quiz Quiz | Financial Truth Or Bunk? Round II Question 1 of 12 You should get out of debt before you start investing. A. True B. False Quiz | Financial Truth Or Bunk? Round II Question 1 of 12 You should get out of debt before you start investing. A. TrueB. False The principle is a good one, but taking an all-or-nothing leap isn't realistic. Paying off all your debt -- student loans, mortgage, etc. -- before you start investing for retirement will force you to miss out on years of compounding returns. A better rule of thumb: Pay down high-interest... Read more ˅ The principle is a good one, but taking an all-or-nothing leap isn't realistic. Paying off all your debt -- student loans, mortgage, etc. -- before you start investing for retirement will force you to miss out on years of compounding returns. A better rule of thumb: Pay down high-interest debt first. After all, it makes no sense to invest your money at, say, an 8% annual return when you’re paying 18% interest on your credit card. Less ˄ Next Question Quiz | Financial Truth Or Bunk? Round II Question 2 of 12 Buying a home is always better than renting. A. True B. False Quiz | Financial Truth Or Bunk? Round II Question 2 of 12 Buying a home is always better than renting. A. TrueB. False Renting is not akin to flushing your money down the toilet. You're paying for something valuable that you need: a roof over your head. Besides, buying a home doesn't make sense for everyone. You have to be prepared to make a long-term commitment. Plus, you have to make sure you can aff... Read more ˅ Renting is not akin to flushing your money down the toilet. You're paying for something valuable that you need: a roof over your head. Besides, buying a home doesn't make sense for everyone. You have to be prepared to make a long-term commitment. Plus, you have to make sure you can afford not only the mortgage payment, but all the extra costs that come with a place of your own. Less ˄ Next Question Quiz | Financial Truth Or Bunk? Round II Question 3 of 12 If your employer offers a match on 401(k) contributions, that should be your first stop for investing. A. True B. False Quiz | Financial Truth Or Bunk? Round II Question 3 of 12 If your employer offers a match on 401(k) contributions, that should be your first stop for investing. A. True Talk about an ace in the hole. That match is free money you shouldn't pass up. For instance, if your employer offers a 50-cent match for every dollar you contribute, you just made a guaranteed 50% return on your investment. You can't beat that. B. False Next Question Quiz | Financial Truth Or Bunk? Round II Question 4 of 12 For retirement, you need to save ten times your final salary. A. True B. False Quiz | Financial Truth Or Bunk? Round II Question 4 of 12 For retirement, you need to save ten times your final salary. A. TrueB. False That's a nice start, but you may need more. This figure is like picking a number out of the air. Retirement is a personal thing, and costs will vary depending on your plans and situation. Run your numbers through our ... Read more ˅ That's a nice start, but you may need more. This figure is like picking a number out of the air. Retirement is a personal thing, and costs will vary depending on your plans and situation. Run your numbers through our retirement calculator to come up with an accurate target for you. Less ˄ Next Question Quiz | Financial Truth Or Bunk? Round II Question 5 of 12 For most married couples, it's better to file taxes jointly than separately. A. True B. False Quiz | Financial Truth Or Bunk? Round II Question 5 of 12 For most married couples, it's better to file taxes jointly than separately. A. True For most people, filing jointly is best. Several tax benefits and credits disappear if you file separately, so doing taxes together will usually save you money. Only in rare instances does it make sense to file separately, such as one spouse has a low income with a lot of unreimbursed medical... Read more ˅ For most people, filing jointly is best. Several tax benefits and credits disappear if you file separately, so doing taxes together will usually save you money. Only in rare instances does it make sense to file separately, such as one spouse has a low income with a lot of unreimbursed medical expenses, or one spouse is self-employed with a complicated tax return the other spouse doesn't understand. Less ˄ B. False Next Question Quiz | Financial Truth Or Bunk? Round II Question 6 of 12 To protect yourself from identity theft, don't sign the back of your credit card. A. True B. False Quiz | Financial Truth Or Bunk? Round II Question 6 of 12 To protect yourself from identity theft, don't sign the back of your credit card. A. TrueB. False An unsigned card will cause you trouble at the cash register -- you'll have to show photo ID for the cashier to accept your payment. Besides, a thief could simply sign your card himself for unauthorized purchases, and then the card signature would match the signatures on the receipts. Next Question Quiz | Financial Truth Or Bunk? Round II Question 7 of 12 You can't lose money investing in bonds. A. True B. False Quiz | Financial Truth Or Bunk? Round II Question 7 of 12 You can't lose money investing in bonds. A. TrueB. False Bonds have a reputation of being safe investments. And they're generally less risky than stocks. But they are not bullet-proof. Their term and interest rates are fixed, but their returns are not. Next Question Quiz | Financial Truth Or Bunk? Round II Question 8 of 12 Stay-at-home moms or dads need life insurance, too. A. True B. False Quiz | Financial Truth Or Bunk? Round II Question 8 of 12 Stay-at-home moms or dads need life insurance, too. A. True They may not have an income, but they still provide valuable financial services to the household. In case a stay-at-home parent were to die, figure out how much money your family would need to cover childcare costs, housekeeping, etc. Term life insurance is a good option because it's inexpens... Read more ˅ They may not have an income, but they still provide valuable financial services to the household. In case a stay-at-home parent were to die, figure out how much money your family would need to cover childcare costs, housekeeping, etc. Term life insurance is a good option because it's inexpensive and you can buy it for a specific period of time -- say, to cover the years your children are at home. Less ˄ B. False Next Question Quiz | Financial Truth Or Bunk? Round II Question 9 of 12 When filing your taxes, avoid claiming credits and deductions that may increase your odds of an audit. A. True B. False Quiz | Financial Truth Or Bunk? Round II Question 9 of 12 When filing your taxes, avoid claiming credits and deductions that may increase your odds of an audit. A. TrueB. False Don't throw away money just because you're afraid of the IRS. No one likes to be audited, but forgoing credits and deductions that you can legally claim just to decrease your odds of a letter from the IRS is silly. As long as you can back up your actions, you have nothing to fear, and you sho... Read more ˅ Don't throw away money just because you're afraid of the IRS. No one likes to be audited, but forgoing credits and deductions that you can legally claim just to decrease your odds of a letter from the IRS is silly. As long as you can back up your actions, you have nothing to fear, and you should claim every dollar Uncle Sam owes you. Less ˄ Next Question Quiz | Financial Truth Or Bunk? Round II Question 10 of 12 When shopping online, it's best to use your credit card, not your debit card. A. True B. False Quiz | Financial Truth Or Bunk? Round II Question 10 of 12 When shopping online, it's best to use your credit card, not your debit card. A. True Generally, your liability for unauthorized purchases is lower with a credit card, so it is safest to use online just in case of ID theft. Plus, if your credit card number is stolen, or a computer glitch causes your order to be charged more than once, your checking account balance won't be aff... Read more ˅ Generally, your liability for unauthorized purchases is lower with a credit card, so it is safest to use online just in case of ID theft. Plus, if your credit card number is stolen, or a computer glitch causes your order to be charged more than once, your checking account balance won't be affected while you iron things out. Less ˄ B. False Next Question Quiz | Financial Truth Or Bunk? Round II Question 11 of 12 Don't buy a red car -- it'll cost more to insure. A. True B. False Quiz | Financial Truth Or Bunk? Round II Question 11 of 12 Don't buy a red car -- it'll cost more to insure. A. TrueB. False There are many factors that affect your insurance rates -- including the make and model of your car -- but the color isn't one of them. Next Question Quiz | Financial Truth Or Bunk? Round II Question 12 of 12 Dollar-cost averaging boosts investment returns. A. True B. False Quiz | Financial Truth Or Bunk? Round II Question 12 of 12 Dollar-cost averaging boosts investment returns. A. TrueB. False For the best returns, you need to buy low and sell high. But because it's nearly impossible to time the market, dollar-cost averaging is still a smart way to invest. It doesn't guarantee higher returns, but by investing a fixed amount at fixed intervals of time, you take the emotion and guess... Read more ˅ For the best returns, you need to buy low and sell high. But because it's nearly impossible to time the market, dollar-cost averaging is still a smart way to invest. It doesn't guarantee higher returns, but by investing a fixed amount at fixed intervals of time, you take the emotion and guesswork out of investing. Dollar-cost-averaging smooths out the market's ups and downs, but doesn't magnify the ups. Less ˄ See Results Quiz | Financial Truth Or Bunk? Round II Results Next QuizCan You Answer Jeopardy!’s Trickiest Investing Questions? See All Quizzes answer_num=2,2,1,2,1,2,2,1,2,1,2,2|answer_text="B. False","B. False","A. True","B. False","A. True","B. False","B. False","A. True","B. False","A. True","B. False","B. False"|total_questions=12|url=/quiz/saving/T065-S001-financial-truth-or-bunk-round-ii/index.html|total_pages=26|page_id=10521|evaltext_num=0|kipad_id=FamilyFinancesQuizzes Advertisement Advertisement Sponsored Financial Content