17-10-2013, 02:50 PM
Financial literacy is one of the important skills in life, but so far there are very few conflict-free and FOC places that people can educated themselves.
Finance class on the Web, for students of all ages
NEW YORK — In an ideal world, a master class available to everyone would reveal all the secrets to retirement planning, telling you how much to save, where to invest and what to do when the stock market crashes.
After all, there are few entirely conflict-free places where investors can educate themselves on the topic, and there’s little to no money-related guidance offered within the public school system, which is where the financial groundwork should really be laid.
Professor Joshua Rauh, a finance professor at the Stanford Graduate School of Business, is acutely aware of that. And this is why he felt compelled to open his graduate-level course on the finance of retirement and pensions to the masses.
“My goal is to try to empower people to make better decisions about their finances with an eye towards retirement and for retirees who are thinking about managing their money,” Prof Rauh said, “whether it is buying an annuity or having a spending rule.”
The course, which is offered free online, began on Monday, featuring online video lectures on topics like “saving for retirement” and “making smart decisions as a stock market investor”.
“A person that would really benefit is someone who is 40 and realising they really need to start putting together a plan for retirement and haven’t thought much about it,” he said.
Without any instruction manual, “people have to be their own chief financial officer,” said Professor Annamaria Lusardi, a financial literacy advocate and economics professor at the George Washington University School of Business, who teaches a class on personal finance.
“The large majority of the population lacks the knowledge of basic but fundamental concepts, from the power of interest compounding, to the effects of inflation, to the workings of risk diversification.”
Each of Prof Rauh’s 10 video lectures are about 45 minutes long, but they are broken into bite-size segments. As Prof Rauh explains each concept, animated visuals and colorful graphs appear alongside him, which helps make the concepts easier to grasp.
Each lecture includes a mix of financial theory and prescriptive advice, some of which people with a reasonable base of investment knowledge may already know: Actively managed mutual funds are not worth the money, so buy index funds. Don’t time the market. Stocks don’t become less risky the longer you hold them.
But the illustrations that accompany the advice — how retiring in 2009, for instance, would have resulted in a nest egg 28 per cent smaller than one resulting by retiring in 2012 — are instructive. “It’s not a rocket science idea, but people don’t see it without having it illustrated for them,” Prof Rauh said.
He added: “Too often, people just budget on the basis of an ‘expected return’ on their assets without thinking about the range of possible outcomes.”
The course ends with two lectures that explain the basics of pensions, the trouble erupting within the United States’ public pension system and how it affects taxpayers and municipal bondholders. Students are then tasked with a pretty serious group project: Analysing a state or local pension plan’s solvency and coming up with ways to make it stronger.
The five teams with the most promising ideas will get to present their proposals in January, all expenses paid, at the Stanford Graduate School of Business to a panel of faculty and experts.
At the end of some of the lessons, some may still be left with their own questions, but that may be Prof Rauh’s point: Now, at least, one knows what to ask. “There is some, ‘Do this, not that,’” he said. “But that doesn’t give them the complexity to operate in life.” The New York Times
http://www.todayonline.com/daily-focus/s...s-all-ages
Finance class on the Web, for students of all ages
NEW YORK — In an ideal world, a master class available to everyone would reveal all the secrets to retirement planning, telling you how much to save, where to invest and what to do when the stock market crashes.
After all, there are few entirely conflict-free places where investors can educate themselves on the topic, and there’s little to no money-related guidance offered within the public school system, which is where the financial groundwork should really be laid.
Professor Joshua Rauh, a finance professor at the Stanford Graduate School of Business, is acutely aware of that. And this is why he felt compelled to open his graduate-level course on the finance of retirement and pensions to the masses.
“My goal is to try to empower people to make better decisions about their finances with an eye towards retirement and for retirees who are thinking about managing their money,” Prof Rauh said, “whether it is buying an annuity or having a spending rule.”
The course, which is offered free online, began on Monday, featuring online video lectures on topics like “saving for retirement” and “making smart decisions as a stock market investor”.
“A person that would really benefit is someone who is 40 and realising they really need to start putting together a plan for retirement and haven’t thought much about it,” he said.
Without any instruction manual, “people have to be their own chief financial officer,” said Professor Annamaria Lusardi, a financial literacy advocate and economics professor at the George Washington University School of Business, who teaches a class on personal finance.
“The large majority of the population lacks the knowledge of basic but fundamental concepts, from the power of interest compounding, to the effects of inflation, to the workings of risk diversification.”
Each of Prof Rauh’s 10 video lectures are about 45 minutes long, but they are broken into bite-size segments. As Prof Rauh explains each concept, animated visuals and colorful graphs appear alongside him, which helps make the concepts easier to grasp.
Each lecture includes a mix of financial theory and prescriptive advice, some of which people with a reasonable base of investment knowledge may already know: Actively managed mutual funds are not worth the money, so buy index funds. Don’t time the market. Stocks don’t become less risky the longer you hold them.
But the illustrations that accompany the advice — how retiring in 2009, for instance, would have resulted in a nest egg 28 per cent smaller than one resulting by retiring in 2012 — are instructive. “It’s not a rocket science idea, but people don’t see it without having it illustrated for them,” Prof Rauh said.
He added: “Too often, people just budget on the basis of an ‘expected return’ on their assets without thinking about the range of possible outcomes.”
The course ends with two lectures that explain the basics of pensions, the trouble erupting within the United States’ public pension system and how it affects taxpayers and municipal bondholders. Students are then tasked with a pretty serious group project: Analysing a state or local pension plan’s solvency and coming up with ways to make it stronger.
The five teams with the most promising ideas will get to present their proposals in January, all expenses paid, at the Stanford Graduate School of Business to a panel of faculty and experts.
At the end of some of the lessons, some may still be left with their own questions, but that may be Prof Rauh’s point: Now, at least, one knows what to ask. “There is some, ‘Do this, not that,’” he said. “But that doesn’t give them the complexity to operate in life.” The New York Times
http://www.todayonline.com/daily-focus/s...s-all-ages