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Basic Investments Edit

module objectives: Edit

In this module, students are introduced to basic concepts
of investment.
At the end of this module, your students will be able to:
Explain the basics of investments
Explain the differences between credit unions and banks
Distinguish between earned and gifted money
Distinguish between needs and wants
Demonstrate that they can compute the sum or
difference of whole numbers and positive decimalsto two places. (Number Sense 2.0)

concepts to cover:

This module will teach basic concepts about investing,
including where it comes from and how it’s used; the modulewill also cover how banks help people keep their money safe.

Math standards covered in this module include: Edit


Develop a deeper understanding of very large and very small numbers and of various representations of them • judge the effects
of such operations as multiplication, division, and computing powers and roots on the magnitudes of quantities • develop fluencyin operations with real numbers, vectors, and matrices, using mental computation or paper-and-pencil calculations for simple casesand technology for more-complicated cases • judge the reasonableness of numerical computations and their results

Social studies standards covered in this module include:


Ig. construct reasoned judgments about specific responses to persistent human issues; IIIg. describe how people create places
that reflect ideas, personality, culture, human needs, government policy, and current values and ideals as they design and build
specialized buildings, neighborhoods, shopping centers, urban centers, industrial parks, and the like; IVh. work independently and
cooperatively within groups and institutions to accomplish goals; Vc. describe the various forms institutions take, and explain how
they develop and change over time; Vf. evaluate the role of institutions in furthering both continuity and change; VIg. describe and
analyze the role of technology in communications, transportation, information-processing, weapons development, or other areas
as it contributes to or helps resolve conflicts; VIId. describe relationships among the various economic institutions that comprise
economic systems such as households, business firms, banks, government agencies, labor unions, and corporation; VIIe. analyze the
role of specialization and exchange in economic processes; VIIh. apply economic concepts and reasoning when evaluating historical
and contemporary social developments and issues; X. identifies and practice selected forms of civic discussion and participationconsistent with the ideals of citizens in a democratic republic.

Vocabulary words: Edit

bond
An investment where you give a company or the government
a loan of your money. For the use of the lender’s money, thebond issuer promises to pay regular interest payments andreturn the principal (usually $1,000) when it matures.


capital gainsWhen your stock increases in value and you earn money


certificate of deposit (CD)
An investment issued by a bank to repay funds deposited
for a defined period of time (usually from 14 days to several
years). In addition to repaying the principal at maturity, aCD pays a market-determined interest rate. CDs start at$100 and can be issued for amounts of $100,000 or more.


debt investment
An investment where you loan your money to someone elsefor interest and the borrower is obligated to the debtor topay the money back.


dividendThe amount of money a company will pay its shareholdersdepending on their earning.


equity investmentAn investment where you loan your money to someone else fora share of the profits they receive when they use the money.


investingA way to make your money grow.


mutual fund
A way to buy into different stocks, including some that
are conservative and some that are risky. Mutual funds
are usually managed by group of investors, a company orsomeone that sets up the mutual fund.


share
When you invest in a company by buying a small part of it.This small part is called a share.


shareholderA person that owns a share in a company.


stock
A number of shares that a shareholder earns that can either
increase or decrease in value, making the shareholder eithermake or lose money.


stock exchange
A central location where stocks, bonds, and other types of
funds are bought and sold. One famous exchange is theNew York Stock Exchange.

lesson: investing Edit

Begin by asking students in a very general manner about what they think of investments.
This should be a discussion that you lead.

Draw a brain map on the board to illustrate how the
conversation progresses. Start with a central bubble in the
middle (what is an investment?) with lines and bubbles
leading out from it including other concepts and ideas wewill cover in the discussion.

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make sure to include the following points:


->Ask students if they know what the word investment means.• Write down any words on the board that are related toinvesting that the students say.


->Ask them to describe how they’ve heard this word used.
Maybe someone has mentioned “investing in their future”
when they talk about college.• Say that this is one type of investing.• Ask them if they know what it means to invest money.


->Explain that an investment can be either an equity
investment or a debt investment. A debt investment
is where you loan your money to someone else for an
amount called interest. An equity investment is where
you loan your money to someone else for a share of the
profits they receive from the way they use the money.
An equity investment differs from a debt investment in
that there is no obligation on the part of the debtor to
pay you back. Debt investments give you a lower returnthan equity investments. Debt investments are alsolower in terms of risk than similar equity investments.


->Explain that debt investments include bonds, bank
certificates of deposits (CDs), and personal loans. These
investments carry a minimal amount of risk and are goodfor investors only able to leave their money in theinvestment for a short period of time (up to about 3 years).

->Explain that equity investments are made up of stocks.


->Explain that stocks are shares of ownership you receive
in a corporation in return for letting them use your money.
Most people buy stocks hoping that they have purchasedthem at a low price and can sell them at a high price.However, the reverse of this can happen as well.


->Explain that it’s smart to investment in both types of
investments. Money that will not be needed for three
years or more are most appropriate for investing instocks while money that will be needed in three yearsor less are most appropriate for bonds.


->Explain that if you can make longer term investments,
which are riskier, then you can invest in stocks. It’s harder
to invest in stocks, because you have to wait longer to
make your money back, and it requires more research
to find a good company to invest in. However, you canalso make more money with stocks.

->Explain that you can invest in a variety of stocks by using a
mutual fund. Investing in a mutual fund is a way to buy into
different stocks,. Normally there is a group of investors, a
company or someone that sets up the mutual fund. You
might have some conservative stocks, and some that are
risky. You don’t have to worry about each one of them, butinstead you get to follow the overall value of the mutual fund.

->Explain that home ownership is an excellent way to invest
for your future. Ask students what they think about home
ownership. With home ownership you get tax write-off
benefits, a stable, long-term investment, and stable housing
costs. Home ownership is a huge financial investment, and
a smart one. After you buy your first home, your financial
options open up even more. You can stay in your home, sell
it and buy a larger property, or even rent out your firsthome and buy another, which will give you more income.

HOPE Corps volunteer worksheet: stock market literacy! Edit

Go through this worksheet with your class—either with the class broken up in small groupsor as an entire class.

answer key (student worksheet on the following page):

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->Ask your students to check out this stock market
information. Do they see the acronym? Explain that theacronym stands for the name of the company, it can beletters or numbers or both.

->Next, point out the dividend to your students.


->After this, show your students the next number, whichindicates whether the stock has gone up or gone down.

..................................................................................

1. Suppose that you bought a share when it was low. You
paid $25.00 for it and now it’s selling at $130.00 a share
so, of course, you want to sell. What is the amount of yourcapital gains?a. $105.00


2. Suppose you bought ten of these shares for $25.00each. How much did you pay for the ten shares?b. $250.00


3. If your capital gains were $105.00 on each share, what
are your capital gains on 10 shares?c. $1050.00

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circle the correct answer                                                                  make your calculations below:

1. Suppose that you bought a share when it was low. You paid
$25 for it and now it’s selling at $130 a share so, of course,
you want to sell. What is the amount of your capital gains?a. $105 b. $95 c. $5 d. $32


2. Suppose you bought ten of these shares for $25 each.How much did you pay for the ten shares?a. $200 b. $250 c. $25 d. $2500


3. If your capital gains were $105 on each share, what
are your capital gains on 10 shares?a. $205 b. $105 c. $1050 d. $2500

Game: invest with the best Edit

Have class break up into groups of 3-4 students.


Your grandfather has given you $5,000 to invest for
college. It’s up to you to invest this money wisely! You’ve
decided that you want to invest in a lot of different types
of investments, including savings accounts, CDs , money
market accounts, mutual funds, and stocks. In order to
prove to your grandfather that you’re a wise investor, you
must come up with the most profitable way to invest yourmoney over a 12 week period.


task:

Your group is responsible for creating an investment strategybased on each of the following types of investments:

Savings accounts and CDs

Money market accounts

Mutual funds

Stocks

notes:

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HOPE Corps volunteer tip: Remember to remind students that the 4 categories must add up to $10,000



Invest with the best Edit

Your grandfather has given you $5,000 to invest for college. It’s up to you to invest this money
wisely! You’ve decided that you want to invest in a lot of different types of investments, including
savings accounts, CDs , money market accounts, mutual funds, and stocks. In order to prove to
your grandfather that you’re a wise investor, you must come up with the most profitable way toinvest your money over a 12 week period.

As a group on how much of the $5,000 should be invested in each of the following:

Savings accounts

........................................................................................................................

CD

........................................................................................................................

Mutual fund (including number of shares in total)

........................................................................................................................

Stock (including number of shares in total) ........................................................................................................................

Invest with the best cards Edit


Have students cut the following cards out and shuffle them
into a pile, with cards facing down. The teacher should ask
students to define different words from the vocabulary list.
When a student answers a question, each group gets tochoose a card from their pile. Make sure that they’re doingthe calculations correctly.

After all the cards are picked, have students calculate thetotal money amount that they have earned.

->Ask them how they think their investments went.

->Ask them if they would do anything differently next time.

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