Date Filter: 2014/12/

Activity: What is Your Investing Risk Profile?

|
Dec 19, 2014
|
Activity, Behavioral Finance, Investing
This is a fun/engaging and short online activity to help students understand their risk profile which is so critical to their investing success.  How often do we see investors with stock heavy portfolios during a bull market, only to see them sell at the first signs of a correction and not get back into the market?  The answer:  too often.  Why?  Investor misjudge their tolerance for risk.  Unfortunately, risk profile surveys often can’t capture your disposition during a stressful...

Fun With Calculators: The Tyranny of Credit Card Interest Rates

|
Dec 19, 2014
|
Activity, Credit Cards
Scenario:  You buy a $1,000 laptop before you head off to college and charge it to your new credit card.  When the first bill comes in the mail you hone in on the Minimum Payment (see NGPF’s lesson on Reading a Credit Card Statement) and pay 2% of your balance or $20 per month.  Your APR (annual percentage rate) on the card is 19% (a typical rate for a new cardholder). Using this calculator and the Tables tab on the right hand side: How many months (and years) would it take for the...

New Feature: Debit Card “Round Up”

|
Dec 19, 2014
|
Savings, Checking Accounts, Debit Cards, New Products
For most people, savings is extremely difficult.  My number one savings tip is to try and make it as automatic as possible, such as by splitting the direct deposit for your paycheck between your checking and savings account.  Now some banks are getting into the game with a new feature to automate savings by rounding up all of your debit card transactions to the nearest dollar (or two) and putting that “digital change” into your savings account.  Ask your students if they think this is a...

Question of the Day: What is Your Financial Resolution?

|
Dec 19, 2014
|
Activity, Question of the Day, Budgeting, Credit Cards, Savings, Purchase Decisions
As the New Year approaches, you might want to challenge your students to make financial resolutions.  The key with resolutions is to develop a strategy to accomplish them since most of us aren’t able to keep them beyond January. In case you were wondering what the leading financial resolutions are (from A Wealth of Common Sense), check out this chart below: ...

Paying Off Student Debt: Two Approaches

|
Dec 19, 2014
|
Budgeting, Student Loans, Current Events
For college seniors who need to start thinking about debt repayment, here are two approaches to consider: Fast-forward way to pay off your student loans (USA Today): The University of North Carolina at Chapel Hill alum found a full-time job in New York City, but an entry-level salary coupled with sky-high rent wasn’t making it easy to pay off his debt. So he set an aggressive budgeting strategy to combat his loans.  “I would always pay double the minimum,” he says. “Doing that...

A Little Bit of Trivia: Who Has the Best 401(k) Plan?

|
Dec 18, 2014
|
Question of the Day, Investing
Not who you would expect.  Brightscope, the experts in rating 401(k) plans put out a top 30 list each year.  What are the Brightscope ratings based on? “The BrightScope Rating was developed by BrightScope, Inc. with the help of leading academics and independent 401k fiduciaries. By analyzing more than 200 individual data points, the BrightScope Rating algorithm calculates a single numerical value for each 401k plan. The data points examined cover broad categories such as total plan cost,...

PSA Idea: Know Your Debt!

|
Dec 18, 2014
|
Activity, Behavioral Finance, Lesson Idea, Student Loans, Advertising
Posted about this Brookings study recently that showed too many college students with loans don’t realize that they have debt.  From Time: The data reveals that students are generally clueless about the costs of higher education and how they’re paying for it. Nearly half of students underestimated their debt loads by at least $1,000, with 25% of students underestimating their debt by $5,000 or more. Why this cluelessness?  They offer a few hypotheses: There are a lot of reasons students...

Chart of the Week: Why You Should Invest When You Are Young?

|
Dec 18, 2014
|
Activity, Question of the Day, Investing, Stocks, Current Events, Chart of the Week
From Business Insider: One way to set up this problem BEFORE showing the chart is to ask your students the following: I will profile three people who made different decisions about saving for retirement.  Tell me who had the largest “nest egg” when they were 65: Susan remembered the mantra “Save for retirement when you are young” and developed that habit.  From the ages of 25-35, she invested $5,000 per year and then watched her investments grow.  So, over the ten years she...

Case Study: How A High School Student Created Investment Gains of $72 Million (Or Not)

|
Dec 16, 2014
|
Activity, Investing, Stocks, Current Events
NY Magazine created quite a stir with a story this week about Mohammed Islam, a high school senior in NY, whose investment success led to gains of $72 million: Late last year, a rumor began circulating at Stuyvesant that a junior named Mohammed Islam had made a fortune in the stock market. Not a small fortune, either. Seventy-two million.  An unbelievable amount of money for anyone, not least a high-school student, but as far as rumors go, this one seemed legit. Everyone at Stuy knew that...

Scary Stat of the Day: Over 1/4 of Students With Loans Said They Have No Student Debt

|
Dec 16, 2014
|
Behavioral Finance, Paying for College, Research, Student Loans, Current Events
From The Guardian: Six in 10 college freshmen don’t really know how much debt they have taken on to pay for their first year in college, revealed a survey of 599 students at one American public university.  Debt seemed to just fall into a black hole for many young people. Just 38% of the respondents were able to estimate the amount of student loans they have taken on to pay for their freshman year.  About 16% had no idea what their debt was, 19% underestimated their burden and 28%...

How Much Are Consumers Saving in December As A Result of Lower Gasoline Prices?

|
Dec 15, 2014
|
Activity, Question of the Day, Purchase Decisions, Current Events
Sorry but memories of my early consulting interviews made me do it.  The interviewer would ask questions like the topic of this post and the interviewee would be expected to walk through their logic to arrive at the answer.  The interviewers didn’t care if you answered correctly only that you took a logical approach to solve it.   Funny to think about how much more quickly this question can be answered today then back in the late 1980s (dating myself). Here is one approach to solving this...

WebQuest: What Credit Card Has the Lowest Interest Rate?

|
Dec 15, 2014
|
Credit Scores, Activity, Credit Cards, WebQuest, Current Events
This might be a fun and quick activity for your students.  Give them ten minutes to search on the web and see who can find the credit card with the lowest interest rate (note:  excludes credit cards offering a 0% APR for an introductory period!).  Be sure they list their source. This is not as easy an exercise as you might expect.  For one, when you google “credit card with lowest interest rates” most of the top results come from credit card comparison sites, which may have their own...

Why You Better Read Your Checking Account Fine Print: A $4.95 Fee To NOT Overdraw Your Account?

|
Dec 15, 2014
|
Checking Accounts, Current Events
This was a new one on me so I needed to post about it (from GoBankingRates): This is a service Bank of America rolled out this year with its SafeBalance account, a product that promises account holders won’t have to pay overdraft charges — just a $4.95 monthly fee. Any time you try to spend more than the balance in your account, your transaction is declined.  Of course, this is an option that’s technically available to anyone, regardless of fee. The Federal Reserve ruled in 2010 that...

Question of the Day: What Does It Cost to Make Our Most Popular Coins?

|
Dec 15, 2014
|
Question of the Day, Payment Types, Current Events
Some surprises to be found in this US Mint report: “…the production cost of the one-cent coin (penny) has decreased 31.1 percent to $0.0166 from $0.0241; the production cost of the five-cent coin (nickel) has decreased 27.6 percent to $0.0809 from $0.1118; the production cost of the dime coin (dime) has decreased 30.8 percent to $0.0391 from $0.0565; and the production cost of the quarter-dollar coin (quarter) has decreased 19.7 percent to $0.0895 from $0.1114.” To summarize: Penny...

Activity: Let’s Make A (Credit Card) Loan!

|
Dec 15, 2014
|
Credit Scores, Activity, Credit Cards
One teaching strategy that I have used in the classroom to teach students about the importance of credit scores and credit reports is to create an activity where they act as credit underwriter.  In this role, they have three levers that they can play with in reviewing three applications:  approve/decline the application, set borrowing limits and set interest rates.  By giving them three levers, they see how lenders can control or mitigate risk on the less creditworthy applications.  ...

Search

Categories