Exams › IBPS PO › English

Directions (1–4): Read the following passage and answer the questions as directed. Paragraph 1: One of the easiest ways to establish a savings habit is to participate in your employer's 401(k) plan. Funds are withheld from each paycheck and deposited into your account. If your employer matches part of your contribution — and many do — you will accumulate even more. A second way to consistently save is with an automatic savings transfer program with your financial institution. You decide how much and when you want funds transferred from your checking account into a savings account. You can also use a payroll deduction plan from your employer and get the same results. Paragraph 2: Along with how much and how often you save, what you earn on your funds will determine how fast your money grows. You cannot control what happens with interest rates or the stock market, but you can consider different types of savings vehicles that provide different returns. The simplest savings vehicle to consider is buying certificates of deposit (CDs) instead of leaving funds in a savings account. CDs usually offer higher interest rates, but they are time deposits and have penalties for early withdrawal. If you can accept not having immediate access to your funds, CDs can be an attractive savings vehicle. Which of the following can be inferred as the theme of the passage?

1. Certificate of deposits is the best way to establish savings habit.
2. Establishing a consistent saving habit and also smart saving with CDs.
3. Employer's 401(k) plan provides a convenient way for consistent and smart savings.
4. Your savings decide how well you flourish and grow.
5. None of the Above

Correct answer: Establishing a consistent saving habit and also smart saving with CDs.

Solution

The passage first explains ways to build a consistent savings habit, such as 401(k) plans and automatic transfers. It then discusses choosing savings vehicles like CDs to earn better returns. So the theme is both consistent saving and smart saving choices.

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