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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Chart: What Are The Mental Mistakes We Make And Why Do We Make Them?
By Tim Ranzetta
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Oct 09, 2017
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Current Events, Chart of the Week, Behavioral Finance, Research, Question of the Day
Answer (from Visual Capitalist): There's a lot of them (and that's what makes us human). This chart shows all 188 cognitive biases we have (click for higher-res version):
Questions:
Chose 3 of the cognitive biases on the outside part of the circle (there are 20 of them) that you think you are most prone too.
Give examples of times that these cognitive biases have crept into your thinking. Here are a few examples:
We tend to find stories and patterns even when looking at sparse data: "I heard...
Infographic: Who Has Access to Financial Education?
In case you missed our groundbreaking research report last week on access to financial education in high schools across the U.S., thanks to the folks at Visual Capitalist, you now have an infographic that summarizes our findings:
Courtesy of: Visual Capitalist...
Who Invests in the Stock Market (By State)?
By Tim Ranzetta
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Sep 08, 2017
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Stocks, Research, Current Events, Question of the Day, Chart of the Week
Hat tip to Big Picture Blog which had a post from a few St. Louis Fed researchers showing how stock market participation varies by state even when taking into account income levels:
Here's a chart showing how participation levels vary based on income level and highlights the state with the highest participation (Connecticut) and lowest participation levels (Mississippi):
Questions for students:
Average household income in the U.S. is around $50,000. What percentage of...
Question: What's the Probability That You Will Live to 100?
Talking about investing for retirement may seem abstract to your students, but what if you framed it from a longevity perspective? Do you want to prepare your financial life knowing that you could live to 100? This MarketWatch article provided some actuarial tables showing the probability of living to 100 for different age groups:
So students in your class have a not too insignificant chance of making it to 100 (6.1% for men who are 25 today and 10.2% for women of the same age). Ah, the powers...
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...
