Mutual Funds

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Having Fun With Investing Cartoons

Here are three cartoons focused on investing and a few questions for your students to ponder:

  • What is happening in the cartoon?
  • What is the motive of the cartoonist?
  • What lessons can you glean from these cartoons to help your financial life?

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In this case, the experts are right! Check out this NGPF Activity on Compound Interest. Create an activity to see what happens when parents invest in college saving or 529 plans when their children are born. 

By |February 15th, 2017|Cartoons, Investing, Mutual Funds, Teaching Strategies|

Ways To Make Investing Simpler

I have been thinking a lot about this issue of how to make investing simpler. I hear from teachers that this is a real pain point for them. I can see in the NGPF podcast stats that the most popular guests tend to be conversations about investing (Mike Finley, Jonathan Clements and Vanguard’s Jim Rowley to name a few). Then this weekend the lightbulb went off. I was heading to the coast listening to Charlie Ellis on the Masters In Business podcast (kinda dorky I know). Those of you not familiar with Charlie Ellis, he is probably the best investment management thinker you have never heard of. Charlie has played a role in two of the juggernauts of modern day investing, the Yale endowment and Vanguard Investments (the king of indexers just crossed $4 billion (I mean TRILLION!)). Oh, and he was an early investor in Berkshire Hathaway too (Warren Buffett’s company)!

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

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 trick is how to make it appealing to a risk-seeking teen audience who loves the “action” of buying and selling stocks. Unfortunately good investing isn’t really about “action”, my buddy Allan Roth has it right when he says, as investors we should “dare to be dull.”

So, here’s the kernel of the idea: Have students take on the role of an investment manager hired to do the following:

Question: Do Active Investment Managers Buy Their Own Funds?

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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 the market (but, alas, almost none do!). Recall also that getting the market return through an S&P500 index fund costs about 0.10-0.15%. Ok, so active managers charge high fees which makes it difficult for them to beat the market. Guess what, someone has figured this out, and it’s not who you might expect…it’s the actual managers running the funds. How do I know? Well, Kinnel found the following:

“At U.S.- stock funds, 47% report no manager ownership. And it gets worse from there. Fully 61% of foreign-stock funds have no ownership, 66% of taxable bond funds have no ownership, 71% of balanced funds put up goose eggs, and

By |January 11th, 2017|Index Funds, Investing, Mutual Funds, Research, Stocks|

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

From Vanguard and seen on Visual Capitalist (hat tip to Big Picture Blog):

By |November 13th, 2016|Behavioral Finance, Investing, Mutual Funds, Purchase Decisions, Stocks|

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

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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 and Dad. He shares his favorite columns, the advice he gives to young people about investing and how he brings the topic alive for young people. You will also learn about his new project to serve as an information hub cataloguing the global efforts underway to improve financial literacy. I look forward to meeting Dan in person this weekend as he delivers the keynote address for the Jump$tart National Educator Conference in Dallas. Enjoy!

Details:

Chart: Can the Pros Beat the Stock Market?

Think again! Here’s some data showing how the professionals are doing over a 1 and 5 year period vs. a passively invested benchmark:

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Activity Idea: Personal Finance Around Me

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 Francisco: