Engaging videos with magic, musicals and an advertisement argue for a specific investment approach.

Thanks to Paul Geddes, a past guest on the NGPF Podcast, for these creative videos advocating for investing in index funds.

Brief introduction to the difference between active and passive (or index) investing, courtesy of Fool.com:

A major debate has been dividing the investment world for years: active versus passive investing. Active investments are funds managed by investment managers that seek to outperform an index over time, such as the S&P 500 or the Russell 2000. Passive investments are funds that are intended to match the performance of an index, not defeat. While both strategies have pros and cons, investors are beginning to shift dollars from active mutual funds to passive mutual funds and passive exchange-traded funds (ETFs).

Why? As a group, actively managed funds, net of fees, tend to underperform their passive counterparts.

For those teaching the Semester course, these videos would work well to reinforce the concepts in Lesson 7.5 (Deep Dive into Funds) or 7.6 (What is your investment strategy?).

In Magic Tricks and Active Investing, a magician with some sleight of hand explains how our brains process illusions in both magic shows and active investing.


Why do we think we can predict future results? What does the wealth management company you want to focus on? Why? What happens to our brains when we see investments that promise high returns?

In The Honest Investment Ad You’ll Never See… What if investment firms promoting active management were required to include full disclosure of the historically low success rate of active versus indexing? If the same rules of pharmaceutical advertising apply to active stock voters, this is what a completely honest ad might sound like.


What does the investment firm emphasize when viewing the first minute of the ad to convince people to invest with them? Which of the warnings about active management did you find most compelling? most surprising? Why do you think financial services companies are not required to make the disclosures you heard in this ad?

In Wall Street Story… What if the debate between active and indexed stock investing were a Broadway musical about rival gangs like West Side Story? Whether sung, read, or spoken, the data overwhelmingly supports indexing for long retention periods.


What is the strongest data in favor of index investing? What argument do the Actives make? Do you find it convincing? Given the slim chance that an active strategy will outperform an index fund, why do you think 50% of mutual funds’ assets are still in active investment strategies?

Find many more videos, including EdPuzzles in the NGPF Video Library.

About the author

Tim Ranzetta

Tim’s savings habits started at 7 a.m. when a neighbor with a broken hip gave him a dog walking job. Her recovery, which lasted nearly a year, led to Tim getting to know the bank clerks quite well (and building a savings account balance of over $300!). His recent entrepreneurial adventures include driving a chipper, analyzing compensation packages for Fortune 500 companies, and helping families make better college funding decisions. After volunteering in 2010 to establish a personal finance program and teach 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 nonprofit, Next Gen Personal Finance. †

This post Videos: A Magician, Honest Investment Ad, and Wall Street Story (entertainingly) pleading for index funds

was original published at “https://www.ngpf.org/blog/investing/videos-a-magician-an-honest-investment-ad-and-a-wall-street-story-make-the-case-in-entertaining-fashion-for-index-funds/”