FINANCIAL HOUSEKEEPING: Quiz your investment knowledge
One of the biggest mistakes many investors make is assuming they know a lot about managing money when the truth is they know very little.
At www.saveandinvest.org – a website created by the National Association of Securities Dealers Investor Education Foundation – the “Investor Knowledge Quiz” is an easy measure of just what you know. No one should find the questions too hard or intimidating, but the 18 queries are diverse enough that they represent a good starting point for a new investor and a brush-up for someone who perhaps wants to take greater control over placing their money in securities – and particularly individual stocks and bonds – now.
SHORT COURSE: Deep-pockets liability
Deep-pockets liability is a slang term for what is more formally called “joint and several liability,” which is a legal doctrine that allows a plaintiff to recover damages from any of several co-defendants, rather than based on the degree of negligence caused by any individual defendant. In short, agreeing to joint and several liability can leave an individual as the “deep pocket” that could be used to pay for the actions of partners and friends.
For example, say that roommates Jack and Mike rent an apartment, agreeing to a joint and several liability clause in the lease. One night, when Jack is traveling, Mike has a party at which his friends damage the apartment and the building. Under joint and several liability, both roommates can be held liable and the landlord can pursue restitution from the deepest pockets; that means that if Mike is broke but Jack isn’t, the landlord can pursue Jack for the entire amount, even though Jack was away when the damage was done.
