Category Archives: Index Funds

Audio Resource: What’s Wrong With Dow Jones Index?


18 minute Planet Money podcast from this spring. Provides students with a better understanding of how the Dow Jones index is calculated and constructed and its shortcomings vs. S&P500 and Wilshire 5000 indices.  Good supplemental resource to use during your investing unit.


Check out the NGPF Investing Activity focused on Asset Allocation using Excel

How Much Is That Investment Education You Provide Your Students Really Worth?

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According to this research study which I unearthed from 2014, more financially knowledgeable workers have higher returns on their 401(k) balances.  While not all that surprising, the research was able to quantify how much that knowledge was actually worth.  It also provides a set of five questions that they used to measure financial knowledge that you could use to test your students.

Here’s their summary:

We show that more financially knowledgeable employees are also significantly more likely to hold stocks in their 401(k) plan portfolios. They can also anticipate significantly higher expected excess returns, which over a 30-year working career could build a retirement fund 25% larger than that of their less-knowledgeable peers. Their investment portfolios are also somewhat more volatile, exposing them to slightly more idiosyncratic risk.

I highlighted the key insight from their research.  So, what do we need to teach students about investing so they can be knowledgeable and generate that larger 401(k) nest egg? Continue reading

Audio Resource: What’s a Stock, Bond and Mutual Fund?

This fifteen minute podcast from Motley Fool (start at 1:00 and finish around 16:00) is a good homework assignment prior to your unit on investing.  The three personal finance experts answer a listener’s question (Ok, it’s really not a question):

When my friends start talking about investing, I just sort of nod my head and pretend to know what they’re talking about. I have been doing this for so long I’m too embarrassed to admit that I don’t know the difference between a stock, a bond, and a mutual fund. Help me sound smart.

As students listen, have them key in on the following questions: Continue reading

What Mutual Fund Type Is Taking Over 401(k) Plans?

From Bloomberg:

Their name:  Target Date funds.
Their share of 401(k) contributions in 2015:  More than half expected in 2015.
Their appeal: Simplicity (“the only fund that you will need”) and low fees.
Selection process: Choose target-date fund close to your retirement. If you are starting to work now and expect to retire in 40 years, then choose Target Date Fund 2055.
Composition: Mix of Stock/Bond funds (index funds preferred) that adjusts; as investor gets closer to retirement, moves more into bonds.
Fees: Average of 0.78%.  Vanguard as low as 0.17%

One way to deepen students understanding of this product is to compare two of the larger offerings: Vanguard and Fidelity.  Have them compare these funds across the following dimensions: Continue reading

What If The NBA Legend Who Blew Through $154 Million Had A Savings Plan?

Time has a recent article claiming that NBA star Allen Iverson is broke (which he denies):

Poor Allen Iverson: the 11-time NBA All-Star, who earned over $154 million during his 15-season career, is reportedly in deep financial trouble.

I thought it would be fun to take a look at his salary (excluding his endorsement history) and have students run a few scenarios (using Excel) assuming that Allen put in a “pay yourself first” process and saved a certain percentage of his earnings, invested them in a “boring” S&P500 fund which could focus his mind on playing basketball.

First his salary history (from Basketball Reference): Continue reading

Question: How Does Gender Affect Investing Behavior?

Sorry, no short answer to this question.  Dive into this WSJ article (or video) highlighting differences between men and women when it comes to investing, which I thought would make for an interesting classroom discussion.

Here’s a series of charts for students to interpret: Continue reading