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Volunteers -Young Adults-Module 4

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Basic Investments Edit

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 fluency
in 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: Edit

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 participation consistent 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, the bond issuer promises to pay regular interest payments and return the principal (usually $1,000) when it matures.
Capital gains
When 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, a CD 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 else for interest and the borrower is obligated to the debtor to pay the money back.
Dividend
The amount of money a company will pay its shareholders depending on their earning.
Equity investment
An investment where you loan your money to someone else for a share of the profits they receive when they use the money.
Investing
A 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 or someone 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.
Shareholder
A 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 either make or lose money.
Stock exchange
A central location where stocks, bonds, and other types of funds are bought and sold. One famous exchange is the New 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 we will cover in the discussion.

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 to investing 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 return than equity investments. Debt investments are also lower 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 good for investors only able to leave their money in the investment 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 purchased them at a low price and can sell them at a high price. However, the reverse of this can happen as well.

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->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 in stocks while money that will be needed in three years or less are most appropriate for bond
->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 can also 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. Youmight have some conservative stocks, and some that are risky. You don’t have to worry about each one of them, but instead 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 first home 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 groups
or as an entire class.

Answer key (student worksheet on the following page):

File

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

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

->After this, show your students the next number, which indicates 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 your capital gains?
a. $105.00
2. Suppose you bought ten of these shares for $25.00 each. 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

Stock market literacy!Edit

File

Circle the correct answer
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
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 your money over a 12 week period.
Task:
Your group is responsible for creating an investment strategy
based 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 to invest 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)

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Stock (including number of shares in total)

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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 to choose a card from their pile. Make sure that they’re doing the calculations correctly.

After all the cards are picked, have students calculate the total 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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