What is the Most Popular Fund For Retirement Accounts?
Answer (with hat tip to Big Picture Blog who posted this research study 401(k)/IRA Holdings in 2016 published by the Center for Retirement Research): Target-Date Funds now used by 72% of participants in retirement plans at Vanguard.
For more on Target Date funds, check out this NGPF primer with an activity idea too.
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Check out this NGPF Case Study: Compound My Interest in 401(k)s
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NGPF Podcast: Tim Talks To Ted Benna, "Father of the 401(k)"
401(k) plans have gone from 0 to about $5 trillion in assets in just 35 years. They have become THE dominant way that people save for retirement today as pensions have become a thing of the past. Today on the NGPF Podcast, you will hear from the "Father of the 401(k), Ted Benna." You will hear about his "aha moment" that led to the birth of the 401(k), the challenges of getting employers and employees to adopt the program in the early years and his opinion of 401(k) plans today. Enjoy!
Details:...
Can The Dow Jones Really Hit 1,000,000 in a Century? Will Warren Buffett's Prediction Come True?
A good math exercise (or spreadsheet activity) that also teaches students about a popular stock market index and the power of compounding.
It starts with a simple question: Do you think the Dow Jones Industrial Average will hit a 1,000,000 in one hundred years?
From MarketWatch:
Doubling, even tripling on that belief that U.S. stocks are the best long-term bet around, he tossed in a fairly bullish call. Buffett said he expects the Dow Jones Industrial Average to be ”over 1 million”...
Question: What's Your Tolerance for Risk?
One of the most fundamental questions when creating an investment plan is assessing how one feels about risk, or to put it more specifically, how does one feel about losing money. If you feel the need to check your investment portfolio every hour or so fearing an incipient crash, well you might not do well with a 100% stock portfolio. Similarly if you are a buy and hold (and forget) type, and you understand the value of long-term investing and bought more stock in 2008 when the stock market...
Activity Idea: 36 Obvious Investing Truths
I am an avid reader of Ben Carlson's Blog A Wealth of Common Sense for a good reason; he takes this complex topic of investing which vexes many an educator and makes it accessible and simpler for all of us to understand. His recent post, 36 Obvious Investing Truths is a great example of this common sense approach to investing as he distills his years of experience into a set of "truths." Here are a few examples:
1. If you need to spend your money in a relatively short period of time it...
This 48 Minute Podcast Explains The Investing Revolution
Teachers often complain that investing is one of their most challenging topics to teach and surprise, surprise, it is an area that students struggle with understanding too. So much jargon (P/E ratios, dividends, IRRs, oh my), so many choices (thousands of stocks and mutual funds to choose from) and so little experience. It’s no wonder that it can seem so overwhelming. Yet there is another way to think about investing and it has one major difference from the existing way that it is taught...
Chart: What Is Risk?
By Tim Ranzetta
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Jul 30, 2017
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Chart of the Week, Research, Index Funds, Investing, Current Events
From Vanguard:
I love this chart because it provides such a clear relationship between risk and return. You want more risk (say 100% stocks), well you better be prepared for great years (54.2% was the best year from 1926-2013) and be able to stomach big down years (down 43.1%) without hopping out. It also demonstrates the most important decision that an investor will make is their asset allocation or their split between stocks and bonds. Note also that stocks here doesn’t refer to picking...
For Your Listening Pleasure, The Top 10 NGPF Podcasts
By Tim Ranzetta
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Jul 25, 2017
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Podcasts, Credit Scores, Credit Cards, Index Funds, Investing, Mutual Funds, Current Events, Credit Reports, Featured Teachers, Entrepreneurship
The NGPF Podcast started almost two years ago (and almost 100 podcast segments later) allowed me to “scratch my own itch.” To anyone who knows me, I love talking finance and since I was young I was always told that I had a voice (and a face) for radio. I thought why not try this “podcasting thing” and see what happens. My thinking was “How much fun would it be to reach out to interesting people, including educators, researchers, columnists, finance experts, authors,...
Question: How Risky Is The Stock Market?
By Tim Ranzetta
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Jul 20, 2017
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Behavioral Finance, Question of the Day, Research, Index Funds, Investing, Stocks, Chart of the Week
Answer: It depends on your time horizon. Short term, it’s risky. Long-term, not so much.
Great chart here (from Barclays) demonstrates how your probability of making money (“gains”) in the stock market increases the longer your time horizon:
“This chart shows the proportion of gains and losses we observe for the same investment (the MSCI World Developed Equities Index) as we change our monitoring horizon from 1 day to 5 years:”
Let me explain:
First, the MCSI...
Cartoons: What Can Dilbert Teach Us About Investing?
By Tim Ranzetta
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Jul 18, 2017
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Cartoons, Research, Index Funds, Investing, Teaching Strategies, Stocks, Current Events
I was doing some research for an upcoming presentation and looking for ways to bring some levity to that “heavy” topic of investing. I didn’t realize that Dilbert could be such a great source of investing advice but I found myself nodding my head in agreement as I enjoyed this series of cartoons:
Message: Don’t mistake an increase in the stock price with “pure genius” when your stock pick may have benefitted from an overall increase in the level of the stock...
What Would You Do If You Owned the World's Best Investing Contract?
By Tim Ranzetta
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Jul 11, 2017
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Investing, Research, Index Funds, Current Events, Article, Excel Activities
Hat tip to Sid Sharma for pointing out this fascinating article. Imagine knowing stock prices one week into the future? Better yet, imagine getting these future stock prices every week for the rest of your life. Such is the plight of Max Herve-George as featured in this story in the Independent:
George, 25, is not a rogue trader. He is not a financial genius. He is just a man who has the life-long right to make investments with Aviva France that are guaranteed to succeed – to Aviva’s...
A Simple Approach to Investing (Podcast and Article)
By Tim Ranzetta
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Jul 10, 2017
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Investing, Research, Personal Finance, Index Funds, Current Events, Podcasts
I just got back from a ride to the coast listening to Meb Faber’s podcast with surgeon and investor Bill Bernstein. I have read a bunch of Bill’s books (Intelligent Asset Allocator, Four Pillars of Investing, Investor’s Manifesto) and he has had quite an impact on my approach to investing (index funds, tilt towards small cap and value). Bill has a great quote in the podcast that really resonated with me: “Investing is simple but not easy.”
First, the simple. He...
Question: Why Should Investors Diversify Their Investments?
This chart reminded why diversification makes a whole lot of sense (hat tip to Big Picture Blog for highlighting it):
Let me explain:
Each asset class is represented by a different color
Purple = Emerging Market stocks from developing economies like Brazil, Russia, India and
Blue = Small Capitalization (or Small Cap) U.S. Stocks
Dark Gray = International Stocks (from developed economies like Germany, England and Japan)
Red = Real Estate Investment Trusts (REITs)
Orange = Large Capitalization...
NGPF Podcast: Tim Talks to Kiplinger Editor and Author Janet Bodnar
It was great to have Kiplinger editor Janet Bodnar on the podcast recently. As a newly minted college graduate, I recall leafing through a Kiplinger magazine (pre-internet) and benefitting from their practical, easy to understand financial advice. As an editor, columnist and author, Janet has an amazing depth of knowledge about personal finance. We focused our conversation on what we should be teaching young people about money as well as the importance of encouraging women to develop...
The Retail Industry Changed Last Week...NGPF Has Resources Aligned To These Current Events
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Jun 18, 2017
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Current Events, Career, Index Funds, Investing, Financial Literacy, Stocks, Purchase Decisions, Economics
This has been a big week of news related to the Retail Industry in the U.S., with implications for the economy, jobs, shoppers, and investors. This post will explain the big events for the week, their implications for you and your students while also providing activities and lessons that are aligned to these current events.
What’s Happening?
US Retail Sales declined month-over-month in May, suffering its biggest decline in 16 months. Coupled with lower inflation, this data suggests...
