How do YOU teach personal finance?
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Aug 04, 2017
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Flash Surveys, Research, Lesson Idea, Financial Literacy, Teaching Strategies, Front Page Spotlight, Tips for Teachers
The start of school is just around the corner and we know that you’re beginning to think about your coming course load for the year. As personal finance education becomes mandated in a growing number of states, we’re curious: How do YOU teach personal finance?
Create your own user feedback survey
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Chart: How Well Do Students Estimate The Monthly Payment On Their Student Loans?
Answer: No real surprise here. They are abysmal at it.
Here’s an explanation of this scatter plot (see below) from the recent Sallie Mae report on How America Pays for College:
Separately, students seem not to be fully cognizant of how much they will repay. Students were asked to estimate their future monthly student loan payments based on the amount of loans they currently have. Similarly to 2008, a scatterplot of responses indicates little correlation between the amounts students...
Interactive: Taking A Skills-Based Approach To Careers
Ask a student what they would like to be when they grow up and you often get a quizzical look along the lines of “How should I know since I have never had a job?” The interactive tools below help you circumvent this by having students identify their skill preferences in jobs which will lead to a list of jobs that match these preferences. A second step in this activity helps students identify jobs that require skills similar to the ones they selected in step one. Taking this...
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...
How is Personal Finance Being Taught in U.S. High Schools?
Here’s a word cloud created by our research team based on their analysis of personal finance course descriptions at almost 10,000 high schools (the larger the font of the word, the more frequently it occurs):
A few observations:
Where is personal finance incorporated in the curriculum? You can see that “business,” “economics,” and “consumer” are some of the more prominent words suggesting that they are embedded in these courses.
What are the most...
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...
Question: Are College Costs Rising?
By Tim Ranzetta
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Jul 23, 2017
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Chart of the Week, Paying for College, Question of the Day, Research, Current Events, Math, Economics
From WSJ (Subscription required):
Questions for students:
Create a one sentence description for the trends seen in each of the two graphs.
A friend says, “What a bummer that college costs keep rising at an incredible rate!” Using the data from the graph on the left, provide a response to her assertion.
Since 1990, all consumer prices (aka the rate of inflation) have basically doubled. Using the rule of 72, make an estimate as to what the inflation rate has averaged from 1990-2016....
Question: How Does America Pay for College?
By Tim Ranzetta
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Jul 20, 2017
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Current Events, Question of the Day, Research, Student Loans, Teaching Strategies, Chart of the Week
Good bell ringer to get the conversation started about paying for college. Can start the class by asking your students how they think families will pay for college:
What are the sources that families tap into?
What are 3 most important categories?
Once they have given their answers, you can move on to the chart below.
Sallie Mae out with their tenth annual study showing how families are covering the cost of college. Lots of interesting graphs, charts, infographics that I will be sharing over...
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...
Question: Why Are So Many Successful People College Dropouts?
Answer: As the data below shows, most successful people are NOT college dropouts.
Jobs, Gates, Zuckerberg. I imagine you’ve heard just a few students over the years come in and question the value of going to college by noting that these great tech innovators left their college before graduating (Reed College, Harvard and Harvard respectively). Well, now you have some data to counteract this myth of the successful college dropout (hat tip to CB Insights who included this chart in their...
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...
NGPF Podcast: Tim Talks To USAA Product Designer, Vikram Parekh
By Tim Ranzetta
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Jul 16, 2017
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Behavioral Finance, Research, Investing, Savings, Podcasts, compound interest
I recently served on a panel with USAA’s Vikram Parekh at the Visa Financial Literacy Summit in Chicago. In my research for the panel, I discovered that Vikram has a really cool job at USAA, which is not your typical financial institution. Their customer base is drawn from military and their families and to say they are hyperfocused on their customers’ financial wellbeing is probably an understatement. You will hear how Vikram uses principles of behavioral finance to get...
Interactive: What Does $1,500 In Monthly Rent Buy You in Different Markets?
By Tim Ranzetta
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Jul 11, 2017
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Interactive, Question of the Day, Research, Budgeting, Chart of the Week
Visual Capitalist provides a great interactive tool for your students to see the wide disparity in the cost of living as seen through rental costs:
With rental prices across the country continuing to rise from this demand, there is one question on the minds of many Americans: how and where can dollars spent on housing be stretched the furthest?
Why is this important to know? Largest cost item for young people living on their own will be that monthly rent check so they better have a realistic...
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...
