Category: Mutual Funds

Activity Idea (with Spreadsheets): Let's Make An Index Fund

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Jan 29, 2017
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Index Funds, Activity, Behavioral Finance, Investing, Mutual Funds, Teaching Strategies, Math, Activities
I awoke this morning thinking “how can you make index funds more tangible for students?” Why do I care about this? Anyone who has heard my rantings before either in this blog or on the NGPF podcast knows that I abhor the Stock Market Game. It teaches all the wrong lessons about investing: the short term nature of it, the “luck” factor, the highest risk strategy wins and so on. At some point, I will create a game to counter these lessons that is focused on index funds. The...

Question: Do Active Investment Managers Buy Their Own Funds?

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Jan 11, 2017
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Mutual Funds, Research, Index Funds, Investing, Stocks
Incentives matter when it comes to financial products. Hat tip to Meb Faber whose podcast I was listening to earlier today and reminded me about this 2008 research report titled “Do Managers Eat Their Own Cooking?” from Russ Kinnel at Morningstar. As the title suggests, Kinnel analyzed whether mutual fund managers actually invest their money in their own funds. Recall that the promise of active management, and the reason that investors pay fees of around 1%, is that they can beat...

Infographic: How is Buying a Car Different From Selecting An Investment?

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Nov 13, 2016
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Behavioral Finance, Investing, Mutual Funds, Stocks, Purchase Decisions
From Vanguard and seen on Visual Capitalist (hat tip to Big Picture Blog): Quick explanation: Looking at past performance of cars is generally a good predictor of how the cars will perform in the future. As evidence, the chart shows that 8 of the top 10 cars from 2005 were still top performing in 2014. With investments on the other hand, the second chart which shows annual returns for various asset classes shows no discernible pattern. Yet, too many investors think that past performance is an...

NGPF Podcast: Tim Talks to Personal Finance Author and Journalist Dan Kadlec

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Nov 04, 2016
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Audio Resource, Behavioral Finance, Personal Finance, Investing, Mutual Funds, Stocks, Current Events, Podcasts
I really enjoyed the conversation that I had recently with Dan Kadlec on the NGPF podcast. With over thirty years as personal finance columnist (you’ve probably seen him in TIME and Money), we had a lot to talk about. When his dreams of being a sportscaster didn’t come to fruition, he focused his efforts on the business beat during the go-go 1980s. Dan describes what motivated him to shift his focus to educating young people about money through his work as a journalist, author...

Chart: Can the Pros Beat the Stock Market?

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Oct 05, 2016
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Chart of the Week, Question of the Day, Research, Investing, Mutual Funds, Current Events
Think again! Here’s some data showing how the professionals are doing over a 1 and 5 year period vs. a passively invested benchmark: _________ Here’s a fun simulation (from NGPF Interactive Library) to further buttress the point that beating the market is DIFFICULT! ...

Activity Idea: Personal Finance Around Me

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Oct 02, 2016
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Activities, Activity, Career, Investing, Mutual Funds, Financial Literacy, Advertising, Purchase Decisions, Current Events
Here’s an activity idea for your Instagram-obsessed students. Have them take pictures of personal finance that they notice in their everyday lives. Here are a few I came across this weekend while wandering around the Bay Area: In the new world of work, many choose to have a “side hustle (here’s the NGPF podcast with Ash Cash who popularized the term and a recent post on the topic),” an additional source of income. Here’s a sign I saw at a Re-Maker faire in San...

These 16 Pages Will Teach Your Students All They Need to Know About Investing...

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Sep 27, 2016
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Article, Behavioral Finance, Budgeting, Index Funds, Investing, Mutual Funds, Stocks, Excel Activities
Here’s a free (and simple) guide to investing from Dr. William Bernstein that brings some clarity to investing. The title tells it all, If You Can – How Millenials Can Get Rich Slowly (it’s really only 14 pages of text and well worth the 15 minutes). Will be a great extension activity and/or long-form reading assignment at the end of your investing unit. Here’s the tantalizing question that the booklet opens with: Would you believe me if I told you there is an...

Article: Help Me With My 401(k)!

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Sep 27, 2016
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Investing, Career, Index Funds, Mutual Funds, Stocks, Article, Compound Interest
Ok, I have to admit that this headline caught my attention “Help! I have no ideas where my 401(k) is, or what to do with it.” The article goes on to describe an individual who has had several jobs and lost track of her 401(k)s along the way. I like the plain English language the writer uses to describe the elements of a 401(k). Here are a few highlights: Regrets from the innovator who created the 401(k): The man responsible is Ted Benna, and he’s currently in his 70s and...

Short Investing Videos As Discussion Starters

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Aug 31, 2016
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Investing, Mutual Funds, Stocks, Current Events, Video Resource
Millenials investing for retirement the wrong way (USA Today) Why is cash the wrong place to invest for retirement? Want to sell your future earnings potential (an investment in yourself) in return for current cash (sky1) Would you consider this arrangement? Why or why not? Retired basketball star Kobe Bryant launching a venture capital firm (CNBC) What is venture capital? Do you think he will succeed? Why or why not? Kobe Bryant: No greater feeling than helping entrepreneurs...

Long-form Reading: What's the Future of Mutual Funds?

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Jul 11, 2016
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Mutual Funds, Research, Investing, Stocks, Current Events, Article
A great article from Barron’s (2800+ words) describing the shifts in the investment environment, covering critical topics that all investors should be aware of, including the shift from active to passive, importance of fees, new regs regarding retirement advising and the importance of technology. On active vs. passive management: SPLITTING THE FUND INDUSTRY into active versus passive camps when assessing winners and losers is in vogue. It’s certainly worth noting that Pimco and Franklin...

NGPF Podcast: Tim Talks to Mike Finley About Simplifying Your Approach To Investing

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Jul 01, 2016
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Index Funds, Behavioral Finance, Research, Investing, Mutual Funds, Teaching Strategies, Podcasts, Tips for Teachers
Thanks to Mike Finley for joining the NGPF podcast to discuss his simple approach to investing. For so many educators, investing is their most challenging topic to cover in the personal finance curriculum. With so many investment options, so many talking heads with such varying advice and so much jargon, it is no surprise that many struggle with this topic.  And yet, like so many things in life, sometimes the simplest approach is the best one. Mike shares the investing wisdom he has gained...

Interactive: Why Fees Matter When It Comes to Investing

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Jun 22, 2016
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Activity, Behavioral Finance, Research, Personal Finance, Index Funds, Investing, Mutual Funds, Teaching Strategies, Stocks, Chart of the Week, Math, Activities, Interactive
Hat tip to Mike Finley, who I met today at the Iowa JumpStart conference outside of Des Moines and showed me this great interactive tool developed by Vanguard (Thanks to Mike Johnson and Julie Ntem for the invitation to present there and for organizing a great event!). Here are the details about this tool and how you might incorporate into an investing lesson: The students get an opportunity to toggle two variables: expense ratio and average annual return. The results appear in a series of bar...

John Oliver on Retirement Planning

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Jun 16, 2016
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Investing, Index Funds, Mutual Funds, Current Events, Video Resource
Hat tip to my colleague, Jessica, for tipping me off to this recent John Oliver video about investment management companies (see an earlier post about his take on the credit reporting and scoring business). This time he turns his sights on the retirement planning industry. For those of you not familiar with John Oliver, well let’s just say, you will want to preview the video before deciding whether or not to use in your classroom. You will be the best judge of what portions might be most...

NGPF Podcast: Tim Talks To Berkeley Professor Terrance Odean About How To Be A Better Investor

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Jun 14, 2016
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Podcasts, Behavioral Finance, Research, Index Funds, Investing, Mutual Funds, Audio Resource, Tips for Teachers
I had a great conversation recently with Terry Odean, the Rudd Family Foundation Professor of Finance at the Haas School of Business at UC-Berkeley. You will walk away with some great ideas not only how to teach investing but also how  you can be a better investor. Terry shares his “big break” that came from his dogged persistence to get access to a researcher’s crown jewels: brokerage account records for tens of thousands of individual investors. This data set would serve as...

Article: Why is Passive Investing Winning?

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Jun 14, 2016
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Article, Behavioral Finance, Question of the Day, Investing, Mutual Funds, Stocks, Current Events
Great summary of why passive investing is winning by focusing on the leading company in the passive investing space (Vanguard). From the Economist: Vanguard now manages over $3.5 trillion on behalf of some 20m investors. Every working day its coffers swell by another billion dollars or so. One dollar in every five invested in mutual or exchange-traded funds (ETFs) in America now goes to Vanguard, as does one in every two invested in passive, index-tracking funds, according to Morningstar, a data...