Can Tom beat the average American on a personal finance quiz?

Don puts Tom in the hot seat with eight questions drawn from a financial literacy quiz developed by researchers at Stanford University and TIAA. The topics range from earning, budgeting, inflation, investing, debt, insurance, and risk to evaluating investment advice. Along the way, there’s plenty of good-natured ribbing, a debate over compounding, and a reminder that even financial professionals can stumble on carefully worded questions.

Later, the guys answer listener questions about whether the small-cap value premium still exists despite the rise of private equity, and whether exotic portfolios like the “Golden Butterfly” really deserve their impressive back-tested reputations.

Plus, Tom gives an enthusiastic endorsement of Don’s Civil War novel, The Line Uncrossed.

00:18 – Tom faces an eight-question financial literacy quiz
03:49 – Inflation versus savings: the trickiest question
05:53 – Why diversification beats owning a single stock
07:11 – The power—and danger—of compound interest
08:50 – Insurance coverage young adults actually need
09:52 – Expected value and lottery math
11:10 – Appropriate investments for different ages
12:40 – Why compounding may be the most important concept in investing
13:39 – Which asset classes have historically produced the highest returns?
16:03 – Does the small-cap value premium still exist?
23:01 – Should investors trust the Golden Butterfly portfolio?
26:45 – Tom’s review of The Line Uncrossed
29:17 – Free meetings with Appella advisors
31:11 – Blue shirts, blue eyes, and wrapping up

Questions? Comments? Click!