LUTCF Course 3 Practice Questions - LUTCF Course 3 Wealth Management, Retirement Planning, And Estate Planning Exam

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A 45-year-old client wants to begin systematically building wealth and asks an LUTCF advisor about the foundational principle that should drive every accumulation strategy. Which concept best describes why starting early matters most?

The time value of money, because compounding earns returns on prior returns over a longer horizon Dollar-cost averaging, because it eliminates all market risk Tax-loss harvesting, because it guarantees a higher after-tax return Diversification, because it removes the need for any risk tolerance assessment

Correct Answer:

The time value of money, because compounding earns returns on prior returns over a longer horizon

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