My class at MIT

Ramit Sethi

I had a great time teaching my 1-hour class at MIT last week. Here are some pictures and things I noticed…


Turnout was great and I taught 117 students over 2 sessions. Interestingly, we spent a lot of time on credit cards: Many students were surprised at my encouragement to get and use a credit card to build credit.

We also talked about risk and reward quite a bit. It seems that we’ve all heard that being an aggressive investor is good, and (maybe especially at MIT?) we like the idea of being entrepreneurial and risk-seeking. But when it comes to our own money, it’s hard to actually do what we’ve learned. And that’s even more true when we’re not that experienced about what our options are.

I taught them that short-term investing is totally misrepresented on TV, like the MSNBC traders with their fancy hand signals and yelling. It seems sexy, but investing isn’t about being sexy, it’s about being optimally profitable. In nearly every study, long-term investing beats a short-term outlook.

We talked about index funds, which a woefully small number of students had heard of. This isn’t particularly surprising, though, since the glamour and money are in mutual funds and other (more expensive) investments.

We also went over creating a budget. When I told them the story of a friend who dramatically underestimated her spending, there was a lot of laughter–the kind of laughter that says “That crazy girl; I’m glad at least I know how much I spend per week.” I’ve heard this laughter in every class I’ve taught and I warned them to be careful about their estimates. Unless you keep a close budget, you just have no accurate idea of your spending.

I was really impressed with the students at MIT. The students asked excellent questions and, when I wasn’t clear, they dug deep to understand the right answer. They even stumped me on a couple of questions! I also got lots of email questions afterwards, some of which I’ll post in the next few days.

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