Investing

Today’s market is more like a buffalo than a bull, Bank of America says, which means it can be expected to roam.
Investors can expect more market volatility in the runup to November’s election.
Here is what investors can expect through the rest of 2024, and the risk they should be watching for now.

The Charging Bull in the Financial District in New York City.
Mairo Cinquetti | Nurphoto | Getty Images

After weeks of hitting new highs, the S&P 500 index on Wednesday suffered its worst trading session since 2022.
The market broadly began to recover Thursday amid a sell-off in technology stocks. Experts say those stock moves and shuffling sectors are common during a bull market.

But Bank of America is calling today’s conditions something else — a buffalo market — which is still in the bull family. But unlike the bull market, it may get tired after a strong runup.
“It might roam, it might wander in the summer months,” said Marci McGregor, head of portfolio strategy at Merrill and Bank of America Private Bank. “But ultimately, what will turn the buffalo back to a proper bull is fundamentals.”
The firm’s outlook sees markets finishing higher this year, based on factors including earnings, the investment cycle, financial conditions, interest rates and generative artificial intelligence.
“We think those fundamental ingredients are in place for the uptrend to continue,” McGregor said. “But you may get some choppiness.”

Expect a pickup in volatility around the election

Election years also tend to come with distinct market patterns.

From July through November, investors can expect a choppy feeling to the markets, McGregor said.
Once the election is over, there may be a strong broader direction in November and December.
Bank of America therefore expects U.S. equities to end the year higher than where they are today, she said.
Those patterns tend to hold true regardless of the outcome on Election Day, according to McGregor.

To best forecast how investments will fare under the next presidential administration, it is wise to pay more attention to policy than politics, McGregor said. The policies that are actually put into effect will have a bigger influence on sectors, industries and companies than which party is elected to power.
The current earnings recovery — following an earnings recession in the first half of last year — is a bigger factor to watch now, McGregor said.
“Ultimately, I think this really comes back to earnings,” McGregor said. “That’s what I really see as the catalyst for the next rotation of the market, more so than the election.”

Resist the temptation to hold too much cash

Higher interest rates put in place by the Federal Reserve have provided the best returns on cash in years.
Yet, experts have started to signal that some investors may be making the mistake of holding too much cash.
“Under-investing is a risk,” Callie Cox, chief market strategist at Ritholtz Wealth Management, recently told CNBC.com.
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Likewise, McGregor said she has started to warn clients that the current higher returns on cash will not always be available and sitting out the market gains carries risks. Bank of America expects the Fed to start cutting rates this year, with a first cut in September followed by another in December.
Sitting out of the markets may have lasting lifetime consequences for investors who are working to meet long-term goals. That goes particularly as the markets are up more than 60% since October 2022, according to McGregor.
“If we get a pullback and we get a pause in the market, we will view it as a buying opportunity if clients are not at their target allocation,” McGregor said.

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With interest rate cuts from the Federal Reserve on the horizon, it could be a good time to shift cash, experts say.  
While many investors are getting 5% yields on money market funds, that will fall once the Fed starts cutting interest rates.
Rates for high-yield savings and certificates of deposit could fall even sooner.

Simpleimages | Moment | Getty Images

With interest rate cuts from the Federal Reserve on the horizon, it could be a good time to shift cash, experts say.  
Traders expect a rate cut in September, according to the CME FedWatch Tool, which could lower the target range for the federal funds rate by a quarter percentage point or more.

Meanwhile, many investors are sitting on hefty cash allocations, including trillions in money market funds, which are generally still paying above 5%.
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After a series of rate hikes, investors piled into money market funds, which typically invest in shorter-term, lower-credit-risk debt, such as Treasury bills.
Total U.S. money market funds hovered near a record of $6.15 trillion as of July 17, with $2.48 trillion in funds for retail investors, according to Investment Company Institute data.
However, money market fund yields will likely fall if the Fed starts cutting rates in September, explained Ken Tumin, founder and editor of DepositAccounts.

“Most [money market funds] seem to closely follow the federal funds rate,” he said.

There is still time to ‘lock in’ CD rates

Next week’s Fed meeting could signal whether a September rate cut will happen. But banks typically start slashing rates for high-yield savings accounts and certificates of deposits ahead of Fed rate cuts, Tumin said.
“CD rates will likely fall pretty quickly once it becomes clear that the Fed is on the verge of cutting,” he said.
As of July 25, the top 1% average rate for high-yield savings accounts was hovering below 5%, while the top 1% for one-year CDs was around 5.5%, according to DepositAccounts.

CD rates will likely fall pretty quickly once it becomes clear that the Fed is on the verge of cutting.

Founder and editor of DepositAccounts

It is a great time to “lock in rates” for a 9-month or one-year CD, said certified financial planner Ted Jenkin, CEO and founder of oXYGen Financial in Atlanta. Jenkin is a member of CNBC’s Financial Advisor Council.

Shift to longer-term bonds

When building a bond portfolio, advisors consider duration, which measures a bond’s sensitivity to interest rate changes. Expressed in years, the duration formula includes the coupon, time to maturity and yield paid through the term.Some experts suggest shifts from money market funds to longer-duration bonds for longer-term investments, which could pay off once interest rates fall.Bond prices typically rise as interest rates fall, whereas money market fund investors can expect lower yields without price appreciation.While it is difficult to predict Fed policy, bonds could see “a healthy lift” if the Fed cuts interest rates by a full percentage point over the next year, Jenkin said.
Like any investment, the best place for cash ultimately depends on your goals, risk tolerance and timeline.

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Vice President Kamala Harris has secured enough support to become the clear front-runner for the Democratic nomination.
While it remains to be seen how much Harris’ policies will mirror those of President Joe Biden, she has been a big proponent for affordable housing both during her tenure as vice president and as senator.

Vice President Kamala Harris speaks on the South Lawn of the White House in Washington, D.C., on July 22, 2024.
Ting Shen | Bloomberg | Getty Images

Harris’ record on housing issues

As attorney general for California, Harris drafted and helped pass the California Homeowner Bill of Rights. It is a set of laws designed to protect homeowners from unfair practices. The California Homeowner Bill of Rights became law on Jan. 1, 2013.
Harris secured an $18 billion agreement as part of a national multistate settlement to benefit thousands of homeowners who lost their homes due to improper foreclosure or fraud in 2012.

As senator, Harris introduced the Rent Relief Act in 2018, a bill that offers tax credits to renters who earn below $100,000 and spend more than 30% of their income on rent and utilities.
Harris resubmitted a second variation of the bill in 2019, which includes a mechanism from the Treasury to pay the tax credit on a monthly basis to eligible households. The latter version also caps the credit at 100% of small area fair market rents instead of 150% of FMR.
Harris last month announced the recipients of an $85 million grant under the Pathways to Removing Obstacles to Housing, or PRO Housing, a first-of-its-kind project through the U.S. Department of Housing and Urban Development aimed to increase building activity and lower housing and rental costs for families in the U.S.

That news came on the heels of a May announcement from Harris budgeting $5.5 billion through the HUD to boost affordable housing, invest in economic growth, build wealth and address homelessness in communities across America.
Such policies come at a time when the country is facing rising homelessness rates and burdensome costs to buy or rent. In 2023, a record 653,100 people experienced homelessness in 2023, up from 256,600 the year prior, according to a report by the Harvard University Joint Center for Housing Studies.

‘There’s potential for a lot of good’

The latest housing policies the Biden administration has rolled out generally aim at increasing the supply of affordable housing and lowering costs for buyers and renters.
Harris has been involved in Biden’s housing policy-making, and it is likely that her campaign will carry on similar blueprints for housing, experts say.
“Generally speaking, it does seem like affordable housing, zoning has been something that has been a talking point of hers for a while now,” said Jacob Channel, a senior economist at LendingTree. “If they keep on the same course that the Biden administration was on, I think there’s potential for a lot of good.”

As a Harris candidacy begins to look more likely, people have been talking about a policy Harris originally floated in her 2020 presidential campaign: the LIFT the Middle Class Act.
The bill would give a refundable tax credit of up to $3,000 per person, or $6,000 per married couple that files joint tax returns, for qualifying middle- and working-class Americans.
Some experts point out the LIFT Act might be better for renters than the 5% rent cap increase Biden proposed in mid-July.
The proposal calls on Congress to cap rent increases from landlords with 50 existing units or more at 5% or risk losing federal tax breaks.
“The concern with the rent cap is that the supply of housing would change,” said Francesco D’Acunto, an associate professor of finance at Georgetown University.
While the rent cap may lead consumers to believe prices will not increase more than a certain amount, it could lead to negative side effects, such as landlords taking their properties off the rental market, said Karl Widerquist, an economist and professor of philosophy at Georgetown University.
Landlords who lose access to tax breaks will still be able to raise rents and the plan would exclude new construction and buildings undergoing major renovations, Channel explained.
The tax credit would not create the same distortions as the rent cap, and it also targets the negative effects of rent inflation, D’Acunto said.
Harris’ LIFT the Middle Class Act has received pushback in the past. While it is not a perfect policy, the LIFT Act is “essentially an expansion in the right direction,” Widerquist said.

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“Friendly fraud” or “first-party fraud” happens when a customer disputes a legitimate charge they made on their credit card, debit card, or another payment method.
Some people do this by accident, largely due to confusion over how the merchant’s name is displayed on their bill.
It’s become easier to dispute charges in recent years with enhancements to mobile banking service, but experts recommend communicating the issue with the merchant before disputing a charge.

Man sits on a sofa in his living room and uses a credit card to pay online.
Stefanikolic | E+ | Getty Images

When a product you ordered online arrives and it’s not up to par, you might contact the merchant to address the problem.
However, what happens if you skip that step and just dispute the credit card transaction? 

More consumers are doing just that — some in bad faith to get their money back from the card issuer, even if there’s no problem with the purchase. It’s just one example of so-called “friendly” or “first-party” fraud that’s catching the attention of security and credit card companies. 
Friendly fraud, when a customer disputes a legitimate charge they made on their credit card, debit card, or another payment method, is responsible for $100 billion of loss for retailers each year, according to identity verification platform Socure.
Additionally, 35% of Americans have committed first-party fraud, and 40% know someone who has, according to the Socure October survey of 1,000 adults.
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Here’s part of the problem: Disputing charges has become easier for consumers in recent years, experts say, largely thanks to efforts to enhance mobile banking service in response to canceled travel and other pandemic repercussions.

“There are legitimate disputes, and the chargeback process was built to recognize and provide some sort of relief for those legitimate disputes,” said Rodrigo Figueroa, chief operating officer of Chargeback Gurus, a company that helps businesses recover revenue.
“Now we see this massive level of abuse,” he said.

Friendly fraud is a broad term

Credit card experts say identifying friendly fraud can be difficult. 
“There are a lot of stats around the rise of it, but it seems like it’s almost becoming this catch-all for anything we just don’t understand,” said Robert Painter, vice president of partnerships at fraud protection platform Kount, an Equifax company. “The word fraud is sometimes even used a little loosely.”
Sometimes, there isn’t an intent to defraud, experts admit.
For example, a consumer who doesn’t recognize the merchant name used to identify a purchase on their credit card bill might dispute the charge as fraudulent. Under the Fair Credit Billing Act, this is a legitimate dispute, said Chi Chi Wu, a senior attorney at the National Consumer Law Center.
“The merchant places a charge on a credit card account and doesn’t use the commonly known name and the consumer disputes that. That’s a legitimate dispute under the law,” said Wu. “They have a right to clarification.”
Still, this scenario can be labeled as friendly fraud.
According to the Socure report, 29% of those who said they engaged in first-party fraud said it was an accident. Others said they were experiencing economic hardship (34%) or they knew someone else who had gotten away with this maneuver and gave it a try (19%). 

Merchants take the biggest toll

Determining the intent of the consumer can be the toughest issue to solve for fraud experts, said Socure CEO and founder Johnny Ayers.
The company launched a consortium of banks and fintech companies in 2023 to address this, identifying data that doesn’t show up in typical credit reports in an attempt to recognize bad actors. 
“We look at the number of accounts, number of disputes, number of overturned disputes, number of closed accounts. You start to stack all of these and you start to see intent,” Ayers said. “You start to see the behavior of this individual has a very large standard deviation from a normal person.”
Whether legitimate or not, experts say merchants can feel the pain from a high volume of chargebacks, when a credit card provider demands a merchant to make good on a transaction disputed by the consumer as fraudulent.
Excessive chargebacks could also affect a merchant’s ability to process cards or a credit card company could levy fines or fees against the merchant, according to Domenic Cirone, vice president of acquirer solutions at Equifax, which acquired Kount in 2021. 

The Merchant Risk Council, which consists of 600 e-commerce companies, reported in April that 94% of its members have experienced first-party fraud in the past year.
Looking at Socure’s research, $89 billion of the $100 billion attributed to this type of fraud is lost by merchants. The remainder comes from credit card fraud loss ($18 billion) and the dispute resolution from the top 15 U.S. banks. ($3 billion).

‘Most folks are honest’

Before consumers make a legitimate dispute, credit card experts and advocates recommend attempting to resolve the issue with the merchant first.
Part of why filing a dispute is so easy is because a credit card issuer will often choose to accept a dispute to preserve its reputation, according to Wu.
“One thing credit card issuers really [have to] think about before they start fighting with merchants all the time is, ‘Is this going to affect the ability to retain good customers,'” she said. “I definitely hear from consumers [saying] ‘X issuer is good on disputes. They stand up for me.” 
Meanwhile, fraud professionals point to social media for the jump in friendly fraud.
A TikTok search of “disputing credit card charge” results in hundreds of videos of finance influencers sharing tips for disputing charges, and even people admitting to disputing legitimate charges to get their money back.
“They just teach you how to go steal money,” Ayers said. “All they’re doing is giving how-to guides of how to work around the rules, basically to systematically steal money from these organizations in a way that made it look like it was some type of duress or distress.”
But a lot of disputes can be attributed to simple misunderstandings between the consumer, merchant and card issuer, Cirone said.
“Every time a transaction is disputed as fraud, it’s a line item that goes through the Visa, MasterCard, Amex, Discover system. That overall statistic that I’m talking about is not driven by social media,” Cirone said. “Most folks are honest. Consumers, cardholders are honest folks and I think there’s a break in communication.” More

If you get paid biweekly, there are two months when you will receive three paychecks instead of two, depending on your pay schedule.
August may be one of those three-paycheck months.

If you are a W-2 employee and get paid biweekly, there are two months out of the year when you will receive three paychecks instead of the usual two.
August may be one of those months.

This is a great opportunity to give your financial standing a boost, experts say.
“Receiving three paychecks in August can seem like a welcome surprise, but it also affords us a great way to plan ahead — and potentially get ahead,” said Winnie Sun, co-founder and managing director of Sun Group Wealth Partners, based in Irvine, California, and a member of the CNBC Financial Advisor Council.
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The months in which you get three checks depend on your pay schedule.
If you received your first paycheck this year on January 5, your three-paycheck months will be March and August.

If you received your first paycheck on January 12, 2024, your three-paycheck months will be May and September.

How to make the most of a three-paycheck month

“It may feel like ‘extra’ income but it’s not, it’s just spread out this way, so treat it as carefully as a typical paycheck and don’t blow it on something you’ll regret later on,” Sun said.
Consider this a chance to financially “level up.”
To that end, start by putting the money to good use by paying down high-interest debt, such as a revolving credit card balance.
“Mathematically, paying off short-term debt is always going to have the most impact,” said Derik Farrar, head of consumer deposits at US Bank.
Typically, credit cards are one of the most expensive ways to borrow money. The average credit card charges an interest rate of more than 20%, according to Bankrate.

“If you’re fortunate enough to be debt-free, then add to your emergency fund,” Sun advised.
Most financial experts recommend having at least three to six months’ worth of expenses set aside, or more if you are the sole breadwinner in your family or in business for yourself. Many households have far less saved these days.
“As we get further away from the pandemic and those cash cushions, it’s probably a good idea to look at how to start to rebuild that again,” Farrar said.
After that, an extra paycheck should go toward future plans, according to Douglas Boneparth, a certified financial planner and president and founder of Bone Fide Wealth, a wealth management firm based in New York.
“Assuming they’re all topped off on cash, this money can be invested for long-term goals,” said Boneparth, who is also a member of CNBC’s FA Council.

Sun recommends putting some funds in a 529 college savings plan or a Roth individual retirement account, which has the added advantage of allowing account holders to withdraw their contributions at any time without taxes or penalties.
Contributions to a traditional workplace 401(k) plan generally cannot be withdrawn without penalty but could come with the added benefit of an employer match, which is essentially free money toward your retirement savings goals.
However, “it doesn’t have to be all serious with no fun,” Sun said, whether that means spending a portion of this paycheck on getting together with friends or family or even just a night out.
“Don’t waste the opportunity and go celebrate carefully too,’ Sun said.
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Social Security is a major source of income for most retirees.
Yet most people don’t know how much income they may receive from the program.
Here’s how to access your Social Security retirement benefit estimate.

Klaus Vedfelt | Getty Images

For most retirees, Social Security benefits is a major source of income.
Yet, just 11% of Americans who aren’t retired say they know exactly how much benefits they stand to receive, according to new research from the National Institute on Retirement Security.

At the same time, 24% are “not very sure” of their benefit amounts and 22% say they have no idea, according to the research, which is based on an October survey of more than 1,200 individuals ages 25 and up.
Men are more likely than women to say they have an exact or very good idea of the amount of monthly Social Security income they may eventually receive, NIRS found.
In 2024, almost 68 million Americans will receive a per month Social Security benefit, totaling about $1.5 trillion in benefits paid during the year. Retired workers receive an average of $1,918 per month.
However, experts say it’s important to know you do not have to be retired or near retirement to start gauging how much income in Social Security benefits you may be set to receive.

How to get your Social Security benefit estimate

To help workers of all ages gauge their benefits, the Social Security Administration provides detailed statements.

Individuals ages 18 and up can check their records online by creating a “My Social Security” account, according to the agency. Workers ages 60 and over who do not have online accounts can still expect paper statements in the mail. Everyone can request paper statements.

“Workers can go to the Social Security Administration website and log into their own account and receive an estimate of their future benefit amounts,” said Tyler Bond, research director at NIRS, during a Tuesday presentation of the firm’s research.
“Most workers seem not to have done that and don’t seem to have a good sense of what they will get personally from Social Security,” Bond said.

What your online statements will tell you

For individuals ages 62 through 70, the big reason to check your Social Security statement is to see how the annual cost-of-living adjustments affect your monthly benefit checks, according to Joe Elsasser, a certified financial planner and president of Covisum, a Social Security claiming software company.
But for workers who are younger, it’s still valuable to check statements.
“The best way to think about it is, what kind of living standard would Social Security provide if you continue to work, continue to basically get wages that are in line with inflation,” Elsasser said. “That’s what the Social Security statement tells you.”
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It can also help to get an idea of how much of your income may be replaced by Social Security in retirement.
For example, if you’re currently earning around $6,000 a month, and your Social Security statement shows an estimated $2,000 monthly benefit, about one-third of your pre-retirement income may be replaced by Social Security benefits, Elsasser said.
However, it’s important to keep in mind the statements are just a snapshot in time, as they don’t project wage increases or future cost-of-living adjustments.
If your earnings history falls short of 35 years, the estimated benefit may fluctuate, because even one additional year of higher wages can have a substantial impact, Elsasser said.
“The closer someone is to age 62, the more accurate it is,” said Jim Blair, vice president of Premier Social Security Consulting and a former Social Security administrator.

What to watch out for

One important reason to check Social Security benefit statements is to make sure there are not any errors in your earnings history.
It’s a good idea to check your Social Security statement annually to double check your wage history as it is updated, Blair said.
The records are correct most of the time, though mistakes can happen, he said.
“If you see earnings are missing or they’re not posted correctly, you can get that fixed,” Blair said. “And the earlier you catch it, the easier it is to fix it.”

To have your earnings record corrected, you can take your W-2 form (or Schedule SE if you’re self-employed), to your local Social Security Administration office, Blair said. (To schedule an appointment or get help by phone, call 1-800-772-1213.)
Other forms of proof can also be used to verify earnings, according to the SSA, including tax returns, wage stubs, pay slips, personal wage records or other documents. The agency will also investigate based on facts you remember if you do not have paper proof.
As the Social Security Administration asks online account holders to update their online accounts amid a transition to a more secure system, account holders should also watch out for fraud, Elsasser said.
Emails may try to redirect unsuspecting individuals to false links that are not affiliated with the SSA to try to steal their personal information, he said.
Before entering any information, make sure the link is a secure “.gov” website, Elsasser said. More important, rather than clicking on email links, opt instead to enter “SocialSecurity.gov” or “SSA.gov” in the search address bar.
To be sure, as Social Security’s trust funds run low, would-be beneficiaries may worry they may not receive benefits once they retire. Ultimately, Congress will likely implement changes to protect Social Security. Nevertheless, younger workers who are paying into the program through payroll taxes should still expect some return, Elsasser said.
“It’s totally reasonable to expect a benefit cut for younger people,” Elsasser said. “But to plan for it not to be there at all is a poor assumption.”

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NextEra is looking at restarting the Duane Arnold Energy Center in Iowa, CEO John Ketchum said.
The Duane Arnold plant ceased operations in 2020 after 45 years of service.
Demand for nuclear power is growing as the tech sector and utilities scramble for carbon-free energy.

Pavlo Gonchar | SOPA Images | Lightrocket | Getty Images

NextEra Energy is considering restarting a nuclear plant in Iowa as demand for carbon-free energy grows amid a historic surge in electricity consumption.
The Duane Arnold Energy Center in Palo, Iowa ceased operations in 2020 after 45 years of service. NextEra CEO John Ketchum said Wednesday a thorough review of the risks is needed to see if restarting the reactor is feasible.

“There would be opportunities and a lot of demand from the market if we were able to do something with Duane Arnold,” Ketchum said on NextEra’s second-quarter earnings call Wednesday.
“We’re looking at it,” he said. “But we would only do it if we could do it in a way that is essentially risk free with plenty of mitigants around the approach. There are few things we would have to work through.”The Duane Arnold plant was scheduled for retirement in late 2020 after a key customer, Alliant Energy, sought cheaper energy alternatives. The plant ceased operations two months earlier than expected after a derecho, a powerful windstorm, damaged some portions of the plant including its cooling towers.
Nuclear energy fell out of favor over the past decade as plants struggled to compete with cheaper energy sources such as natural gas and renewables. The 2011 Fukushima nuclear accident in Japan also raised safety concerns. A dozen nuclear reactors in the U.S. closed from 2013 through April 2021, according to the Congressional Research Service.

Rush for carbon-free energy

But interest is growing in nuclear again as the U.S. faces significant wave of power demand from artificial intelligence data centers, a renaissance of domestic manufacturing and the electrification of the economy.
“The existing nuclear plants are the hottest thing in power right now,” Mark Nelson, founder of Radiant Energy Group, said on CNBC’s “Last Call” in June. “They’re going to be able to nearly name their price to build out to data centers that are parked right at their gate.”

Electricity demand is rising at the same time the U.S. is trying slash carbon dioxide emissions by accelerating the buildout of renewable energy. Solar and wind, however, still face challenges providing reliable power due to their dependence on weather conditions.
While CEOs in the renewable industry believe battery storage will ultimately solve that problem, utility executives have insisted that nuclear and natural gas are needed to maintain grid reliability.
Southern Company CEO Chris Womack said last month that he thinks the U.S. needs to install more than 10 gigawatts of new nuclear power to meet electricity demand. Southern Company, one of the largest utilities in the U.S., completed the first new nuclear plant in decades last year, though the project finished behind schedule and over budget.
The push for new nuclear has also faced criticism. AES Corporation CEO Andrés Gluski told CNBC in June that the enthusiasm for nuclear is “overblown,” pointing to the costs associated with building new plants.
The tech sector, however, has shown growing interest in nuclear as way to provide reliable power for data centers. Earlier this year, Amazon Web Services bought a data center powered by nuclear energy from Talen Energy for $650 million. The cloud service giant is also in talks with Constellation Energy for electricity supplied from a nuclear plant on the East Coast, people familiar with the matter recently told The Wall Street Journal.
The U.S. maintains the largest nuclear fleet in the world with 94 operating reactors. The Biden administration has provided tax credits under landmark Inflation Reduction Act to prevent more reactors from going offline. In December, the U.S. and a coalition of more than 20 other countries pledged in December to triple nuclear power by 2050 to address climate change. More

“Everybody should know about interest rates, inflation, share investment portfolios — nobody teaches this,” says Bernhard Gademann, president of the elite Swiss boarding school Institut auf dem Rosenberg.
His students manage hypothetical $1 million portfolios and present their investment picks to a mock board. 
Research shows taking a financial education class in high school pays off.

Institut auf dem Rosenberg, a private boarding school in St. Gallen, Switzerland.
Courtesy: Institut auf dem Rosenberg

With a sticker price of more than $160,000 a year, Institut auf dem Rosenberg in St. Gallen, Switzerland, may be one of the most expensive boarding schools in the world. So, it’s only fitting that students learn about money.
But rather than focusing on basic budgeting and managing credit, finance classes at the elite Swiss institution cover wealth creation, philanthropy, family businesses and succession management.

“Being able to educate these future leaders gives us the privilege to pioneer course concepts,” said Bernhard Gademann, president of the school. “Everybody should know about interest rates, inflation, share investment portfolios — nobody teaches this.”
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In one of the most popular classes, which covers wealth creation and finance, students manage hypothetical $1 million portfolios and present their investment picks to the mock board of a family office — private companies that wealthy families establish to handle their investment management.
Classroom discussions, for students ages 12-18, cover various asset classes, risk versus reward and the power of compounding.
Too often, these topics are left out of traditional curriculums because they are considered “nonacademic,” Gademann said. However, these ideas overlap with the same concepts taught in math and biology, among other subjects.

Bernhard Gademann with students in a class.
Courtesy: Institut auf dem Rosenberg

“It’s truly important to understand the dynamics, the implications and why it’s relevant because it touches every aspect of your daily life,” Gademann said. “All of these things are interconnected, and wealth creation shouldn’t be ignored.”
“Not being able to provide [students] with this information and training is really stealing an opportunity for them being successful,” he added.

The lifetime benefit of a financial education

While most students don’t have access to these types of classes, more U.S. high schools are tackling financial literacy.
As of 2024, more than half of all states already require or are in the process of requiring high school students to take a personal finance course before graduating, according to the latest data from Next Gen Personal Finance, a nonprofit focused on providing financial education to middle and high school students.
Research shows taking a financial education class in high school does pay off.
In fact, there is a lifetime benefit of roughly $100,000 per student from completing a one-semester course in personal finance, according to a report by consulting firm Tyton Partners and Next Gen.
Much of that financial value comes from learning how to avoid high-interest credit card debt and leveraging better credit scores to secure preferential borrowing rates for key expenses, such as insurance, auto loans and home mortgages, according to Tim Ranzetta, co-founder and CEO of Next Gen and a member of the CNBC Global Financial Wellness Advisory Board.
However, often what students are most interested in is investing. “Students are at the edge of their seats when you ask them about building wealth and becoming a millionaire,” said Yanely Espinal, Next Gen’s director of educational outreach.
As a result, teachers and schools are starting to prioritize those lessons because they have the highest engagement among students of all of the personal finance topics, Espinal said. “Hook them where they are most interested.”

Still, “when you teach investing, focus on the long term,” advised Espinal, who is also a member of the CNBC Global Financial Wellness Advisory Board. And budgeting, banking, paying for college, taxes, credit management and the psychology of money are equally important, she said.
“Let’s not leave financial education to TikTok,” she said. “We have to get serious about creating a formal education.”

Let’s not leave financial education to TikTok.

Yanely Espinal
director of educational outreach at Next Gen

Many studies also show there is a strong connection between financial literacy and financial well-being.
Students who are required to take personal finance courses starting from a young age are more likely to tap lower-cost loans and grants when it comes to paying for college and less likely to rely on private loans or high-interest credit cards, according to a 2018 report by Christiana Stoddard and Carly Urban for the National Endowment for Financial Education.
Further, students with a financial literacy course under their belt have better average credit scores and lower debt delinquency rates as young adults, according to 2016 data from the Financial Industry Regulatory Authority’s Investor Education Foundation, which seeks to promote financial education.
In addition, a study by the Brookings Institution in 2018 found that teenage financial literacy is positively correlated with asset accumulation and net worth by age 25.

Among adults, those with greater financial literacy find it easier to make ends meet in a typical month, are more likely to make loan payments in full and on time, and less likely to be constrained by debt or be considered financially fragile.
They are also more likely to save and plan for retirement, according to data from the TIAA Institute-GFLEC Personal Finance Index based on research, which has been conducted annually since 2017.
Meanwhile, in the U.S., the trend toward in-school personal finance classes is continuing to gain steam.
There are another 50 personal finance education bills pending in 20 states, according to Next Gen’s bill tracker.

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