Managing Personal Wealth Quiz

I'm currently taking an accelerated class in personal wealth management. Every week, the instructor sends out a quiz. I thought I would post the questions and my answers here in order to share the financial information. Most of the questions and answers are vague, but if you have any questions about the topics, please post them in the comments and I'll try to be more specific.

1. BRIEFLY, why do I prefer "don't be poor in retirement"rather than "maximize your wealth" as the primary overall objective in Wealth Management?
Don't be poor in retirement is an obtainable goal. Maximizing wealth is nigh on impossible unless you make every right decision and buy and sell at the exact right moments. Obviously by not being poor and meeting that goal, you can then set higher goals, but it is good "not to be poor."

2. We have several levers to work with in managing personal wealth -- asset allocation, tax structures, etc. Which lever (or 2 levers) are the most under our control and, in that sense, the most powerful.
The two most powerful levers under our control are income and expenses. Of all the things we can control, these two we can control directly. By cutting expenses, we can increase the amount of money we can set aside for reitrement or other financial goals. By increasing income (through moving to a different job) we can also gain additional money for our financial goals.

3. Why do we care about relatively small differences in costs in wealth management?
Unfortunately, a small cost, like 1% of all assets managed can add up considerably over time. Because personal wealth takes a long-term view, 1% can be the difference between thousands of dollars by the time you retire or meet your financial goals.

4. What are the advantages of bond mutual funds? What are the disadvantages?
The advantage of a bond mutual fund is that it provides diversification to someone who wants a wide variety of investments. The disadvantages are that it could carry more risk due to the manager facing the pressure to beat the market. They are also not very liquid. An additional risk is that they are more susceptible to interest rate changes, because there is not necessarily a consistent start/end date for the bonds within the fund.

5. Briefly, what is the advantage of a Roth IRA compared with a traditional IRA?
Roth IRA: Able to invest after-tax dollars. The contribution limits are relatively high for a middle class investor. Can withdraw money for large purchases. Probably the greatest advantage is that you don't pay taxes on the money when you do withdraw it.

Traditional IRA: Must contribute before-tax dollars (set up through the employer). Must pay taxes on the income when it is withdrawn. The same contribution limits that apply to a Roth IRA also apply to the IRA.

6. What are the disadvantages of a tax-deferred annuity (TDA)?
Extremely high costs due to the age of the insurance company (bureaucracy). Fees are generally in the form of a % of holdings. When compared with an index fund, the index tends to return more (mostly because of fees on the TDA).