Listen to the first 7.5 minutes of this audio resource from the Economist to hear a persuasive argument (speakers with an English accent always sound more persuasive!) about the advantages of investing passively (low-cost index funds) vs. active management. Good opportunity for your students to hear investing terms that they should be familiar with while also listening critically to understand the speaker’s viewpoint.

Questions for your students:

• What are the main arguments the speaker makes against the typical investment manager?
  • Which one do you find most persuasive?
• “Actively managed funds are bound to disappoint.”
  • What is an actively managed fund?
  • Do you agree with this statement? Why or why not?
• How are brokers and advisers typically paid? Why might this be an issue?
• Why are fees so important? What impact can they have on long-term returns?

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A few other resources to pair this up with:

• NGPF Data Crunch: How Has the Average Investor Done Over the Past 20 Years?
• NGPF Math Activity: Active Vs. Passive Funds

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.