This Planet Money podcast: Brilliant vs. Boring (21 minutes) will engage your students and deepen their understanding of the philosophies underpinning active vs. passive management.

Here’s the teaser:

In 2006, Warren Buffett posed a challenge. He bet that the smartest hedge fund managers out there couldn’t beat the world’s simplest, most brainless investment. In this show, we tell you who’s winning.

I especially like the Planet Money description of index funds, which will help demystify what index funds are, how they were created, why they weren’t initially popular and how they have performed relative to actively managed funds.

Key question to ask your students: Why do actively managed mutual funds and hedge funds continue to make up the majority of dollars invested despite their abysmal track record vs. “boring” index 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.

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