Lesson 7: Investing 101 & Diversification Jenga
Students will be able to identify different types of investments and explain the importance of diversification.
Last Session Debrief (5 min)
Slide: Debrief last session
Ask: What stories emerged when you interviewed people about their experience with credit?
Have students share out a few stories.
Investing 101 (15 min)
Slide: How do people plan for their financial future?
Ask: Up till this point, how have you planned for your financial future? And how might other people plan for their financial future?
Have students share out a few ideas (e.g., investing, cash, retirement accounts, etc.)
Slide: What’s the difference between saving and investing?
Ask: Does anyone know the difference between saving and investing?
Say: Saving is when you set aside money for a goal or an emergency fund. Investing is when you make your money work for you—to make more money—while you leave it and let it grow.
Slide: Invest to make money on your money
Say: Investing is a way of making money on your money. People buy different investment vehicles with the hope that they’ll earn more money than a savings account. The stock market has an average return rate of 10%, whereas a savings account has an average APR of around 0.1%. So the stock market would likely grow your money more over time than leaving all of your money in your savings account.
Slide: What are the different types of investments?
Say: There are four main types of investments.
- Stocks. You buy a small percentage of a company in hopes that the company continues growing and is worth more in the future. So for example, you might buy stock in Nike, Disney, or Tesla.
- Bonds. You purchase debt for a company or government.
- Funds. You acquire a mix of stocks, cash, and bonds.
- Crypto. This is a decentralized digital currency that you can invest in—and we’ll learn more about crypto in the next session.
Diversification of Investments (10 min)
Slide: What is diversification?
Ask: Does anyone know what it means to diversify your investments?
Have students share out a response or two.
Say: Now let’s watch this video on diversification:
Slide: You’ve heard the phrase…
Read this slide verbatim.
Slide: Diversification can help…
Read this slide verbatim.
Diversification Jenga (15-20 min)
Slide: Diversification Jenga
Say: Now we’re going to play Diversification Jenga. Can anyone quickly explain how to play Jenga?
Explanation: You pull out one block from any level below the top two levels. Then you place the block on the top of the tower in the opposite direction of the row below it. Continue this process until the tower falls.
Say: For each block you pull out, read aloud the type of investment that’s written on the block to get an idea of the different types of investments available. Once the tower falls, look through the blocks and become familiar with the mix of investment types. And keep in mind that the collapsing tower mimics a collapsing financial market or a collapsing personal portfolio—but notice that the towers, like financial markets and portfolios, can be rebuilt…and the best strategy for an individual is to diversify their investments and hold onto them over time to ride out the falling and rising markets.
Say: Once your tower falls, take all the blocks and organize them into three diversified portfolios, now that you know a little more about what it means to diversify.
Slide: Share out
Ask: Which types of investments were you unaware of until you played Jenga?
Have students share out and then put away the Jenga game(s).
Display Takeaway slide.