Words on wealth: test yourself on your financial knowledge

This week, something a little different: a 20-question quiz on how much you know about the world of money, including tax and investments. Most questions refer to the kinds of facts you’d pick up along your financial journey if you were diligent about managing your money and engaged regularly with a financial adviser. Here goes…

1. If you put R100 into an investment that offered interest of 10% a year and you reinvested the interest, how much would you have in total after 10 years (rounded to the closest rand)?

a) R110

b) R200

c) R223      

d) R259 

2. The great English mathematician and scientist Sir Isaac Newton lost a fortune in what speculative investment failure?

a) The Dutch tulip mania crash of 1637

b) The South Sea Bubble of 1720

c) The Wall Street Crash of 1929

d) The dot.com bubble of 2000

3. What is the repurchase, or repo, rate?

a) The interest rate you receive on a 12-month fixed deposit

b) The interest rate at which banks borrow from the Reserve Bank

c) The interest rate a bank charges its most creditworthy customers

d) The interest rate banks charge on property repossessions

4. Which of these types of credit would typically have the lowest interest rate?

a) A personal loan

b) A car finance agreement

c) A mortgage loan on a property

d) A credit agreement on a lounge suite

5. What is a testamentary trust?

a) A fund for widows and orphans

b) A family trust you establish during your lifetime

c) A trust established through your will

d) A type of unit trust fund

6. Which regulatory body regulates financial advisers?

a) Department of Trade and Industry

b) SA Reserve Bank

c) SA Revenue Service

d) Financial Sector Conduct Authority

7. What is the maximum amount you can save per year in a tax-free savings account?

a) R10 000

b) R24 000

c) R36 000

d) There is no limit.

8. Which of these is not a type of retirement fund governed by the Pension Funds Act?

a) Unit trust fund

b) Preservation fund

c) Retirement annuity fund

d) Provident fund

9. Who is the current governor of the SA Reserve Bank?

a) Trevor Manuel

b) Lesetja Kganyago

c) Enoch Godongwana

d) Jerome Powell

10. To what percentage of assets in a deceased estate is the executor entitled as a maximum fee (excluding VAT) for winding up the estate?

a) 2.5%

b) 3.5%

c) 4.5%

d) 5.5%

11. Which of the following actions would trigger capital gains tax?

a) Selling your car

b) Switching investments in a retirement annuity

c) Selling shares in a listed company

d) Cashing out a bank fixed deposit

12. What is the top marginal income tax rate for individuals?

a) 35%

b) 40%

c) 45%

d) 50%

13. What are you not taxed on?

a) Income below the tax threshold

b) Donations to your spouse

c) Contributions to a retirement fund

d) All of the above

14. What is the acronym of the state-sponsored insurance company that covers individuals and businesses against damage from riots?

a) ASISA

b) SASRIA

c) SARS

d) SAICA

15. Roughly how many companies are listed on the main board of the JSE?

a) 300

b) 350

c) 400

d) 450

16. “Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn't, pays it.” To whom is this quote attributed?

a) Sir Isaac Newton

b) Albert Einstein

c) Margaret Thatcher

d) Justin Bieber

17. What index is commonly used to measure inflation?

a) JSE/FTSE All-share Index

b) MSCI World Index

c) Producer Price Index

d) Consumer Price Index

18. If the inflation rate is 5% a year, how many years will it take for today’s money to halve in value?

a) 10 years

b) 14 years

c) 20 years

d) 27 years

19. What is an exchange-traded fund?

a) A type of collective investment scheme

b) A benevolent fund for retired stockbrokers

c) A venture capital fund

d) A forex trading scheme

20. What type of collective investment scheme, according to the Association for Savings and Investment SA classification system, can invest across asset classes, globally or locally, in any proportion?

a) Worldwide Equity General fund

b) Global Multi-Asset High-Equity fund

c) Worldwide Multi-Asset Flexible fund

d) Global Interest-Bearing Variable-Term fund

The correct answers are: 1d, 2b, 3b, 4c, 5c, 6d, 7c, 8a, 9b, 10b, 11c, 12c, 13d, 14b, 15a, 16b, 17d, 18b, 19a, 20c. An answer that needs further explaining is that of question 16: although widely reported as a quote by Einstein, reputable fact-checking sources have found no evidence to support this.

If you answered 15 or more questions correctly, you are well into your financial journey and able to have meaningful conversations with your financial adviser.

* Hesse is the former editor of Personal Finance.

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