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Learning Objectives

Students will be able to:

Identify strategies recommended for a beginner investor and explain why these strategies may be beneficial
Explore their own risk tolerance through a worksheet
Experience making a variety of investment decisions through an interactive simulation
Understand what a brokerage account is and how to open one

National Standards for Personal Financial Education

Earning Income

10c: Explain the importance of participating in employer sponsored retirement plans, when available, and contributing enough to qualify for the maximum employer match

Saving

6a: Explain how traditional IRAs (individual retirement accounts), Roth IRAs, and education savings accounts provide incentives for people to save

Investing

1c: Assess their personal risk tolerance using an online tool or worksheet
2b: Compare nominal annual rates of return over time on different types of investments, including cash flows and price changes
6a: Recommend portfolio allocation between major asset classes for a short-term goal versus a long-term goal
9a: Identify several behavioral biases that can result in poor investment decisions (e.g. loss aversion, investing in employer stock, home bias, mental accounting)
10b: Explain how automating investment activities can help people avoid making emotional investment decisions
11b: Choose a discount broker and research the minimum starting account balance, minimum monthly investment, and trading costs

QUESTION OF THE DAY: Over a 20-year period, what percentage of investing pros "beat the market?"

Answer the question on the first slide in the space below. Then, compare your answer to the answer on the second slide. Finally, follow your teacher’s directions on how to answer the follow-up questions on the last slide.

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Over a 20-year period, what percentage of investing pros "beat the market?"

INFOGRAPHIC: Tips for Beginner Investors

As you saw from the previous Question of the Day, professional investors rarely beat the market! So what can beginner investors do to maximize their return on investments? Review this infographic to learn about some recommended strategies for beginning investors. Then answer the questions.

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Review the section titled “Can You Pick Winning Stocks”. Why would it be risky to have your strategy be based only on picking individual stocks?

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Choose one of the Cognitive Biases listed that can contribute to making bad investing decisions. Describe a time when you’ve fallen victim to this Cognitive Bias (it doesn’t have to be related to investing).

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Use the section titled “Risk Tolerance” to answer these questions:
How can too little risk affect your investing experience?
How can too much risk affect your investing experience?

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The final section is titled “Remember, Good Investing Is Boring.” Explain what this means to you and whether this affects your enthusiasm for investing.

REFERENCE: Investment Risk Tolerance Quiz

Let’s take a closer look at risk tolerance. Answer the questions in this investment risk tolerance quiz and then calculate your total score. Then answer the questions below.

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What was your total score? What type of risk tolerance does this mean you might have?

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Do you agree with the results you got? Explain your answer.

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How might knowing your risk tolerance be beneficial to you as an investor?

ARTICLE: What Is a Brokerage Account and How Do I Open One?

Now that you have learned about and practiced implementing some of the investment strategies you can use, you might be wondering how you can actually start investing. In order to buy stocks, bonds, funds, and other investments on your own, you’ll need a brokerage account. Review the article to learn more about brokerage accounts and how to open one. Then answer the questions.

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In your own words, explain the difference in how a brokerage account functions compared to a normal bank account.

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Describe how online brokerage accounts differ from managed brokerage accounts.

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What does it mean when someone says “Good investing is boring”?

There should be little to no change in how your portfolio performs

You should avoid talking to anyone about how your investments are performing

You’re better off making long-term investments that don’t require day-to-day management

You should avoid checking how your investments are doing for at least 10 years

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All of the following are recommended strategies for beginner investors EXCEPT…

Try to pick winning stocks and beat the market

Recognize cognitive biases that may be influencing your decisions

Minimize expense ratios to cut back on costs

Choose your investments based on your risk tolerance

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Which of the following is a characteristic of a brokerage account?

Typically no capital gains tax

Limits on how much you can invest

No penalties for withdrawing your money

Require a large amount of money to open an account

Lesson 8: Start Investing

Lesson 8: Start Investing

Learning Objectives

Learning Objectives

QUESTION OF THE DAY: Over a 20-year period, what percentage of investing pros "beat the market?"

Over a 20-year period, what percentage of investing pros "beat the market?"

INFOGRAPHIC: Tips for Beginner Investors

Review the section titled “Can You Pick Winning Stocks”. Why would it be risky to have your strategy be based only on picking individual stocks?

Choose one of the Cognitive Biases listed that can contribute to making bad investing decisions. Describe a time when you’ve fallen victim to this Cognitive Bias (it doesn’t have to be related to investing).

Use the section titled “Risk Tolerance” to answer these questions: How can too little risk affect your investing experience?How can too much risk affect your investing experience?

The final section is titled “Remember, Good Investing Is Boring.” Explain what this means to you and whether this affects your enthusiasm for investing.

REFERENCE: Investment Risk Tolerance Quiz

What was your total score? What type of risk tolerance does this mean you might have?

Do you agree with the results you got? Explain your answer.

How might knowing your risk tolerance be beneficial to you as an investor?

ARTICLE: What Is a Brokerage Account and How Do I Open One?

In your own words, explain the difference in how a brokerage account functions compared to a normal bank account.

Describe how online brokerage accounts differ from managed brokerage accounts.

What does it mean when someone says “Good investing is boring”?

All of the following are recommended strategies for beginner investors EXCEPT…

Which of the following is a characteristic of a brokerage account?

Learning Objectives

Learning Objectives

QUESTION OF THE DAY: Over a 20-year period, what percentage of investing pros "beat the market?"

Over a 20-year period, what percentage of investing pros "beat the market?"

INFOGRAPHIC: Tips for Beginner Investors

Review the section titled “Can You Pick Winning Stocks”. Why would it be risky to have your strategy be based only on picking individual stocks?

Choose one of the Cognitive Biases listed that can contribute to making bad investing decisions. Describe a time when you’ve fallen victim to this Cognitive Bias (it doesn’t have to be related to investing).

Use the section titled “Risk Tolerance” to answer these questions: How can too little risk affect your investing experience?How can too much risk affect your investing experience?

The final section is titled “Remember, Good Investing Is Boring.” Explain what this means to you and whether this affects your enthusiasm for investing.

REFERENCE: Investment Risk Tolerance Quiz

What was your total score? What type of risk tolerance does this mean you might have?

Do you agree with the results you got? Explain your answer.

How might knowing your risk tolerance be beneficial to you as an investor?

ARTICLE: What Is a Brokerage Account and How Do I Open One?

In your own words, explain the difference in how a brokerage account functions compared to a normal bank account.

Ava is a recent college graduate. She realized she has some extra money in her budget and would like a way to invest it while also having access to it should she need cash. What would be best for Ava?

Remi contributes as much as he can to his employee-sponsored 401k and personal IRA. He would like to make more investments in individual companies to try and increase his long-term earnings. What would be best for him?

Naomi would like to invest for retirement but doesn’t want to worry about paying taxes every year. What would be best?

Ira is ready to take on some more risky investments and would like to start exploring options trading. What would be best?

Describe how online brokerage accounts differ from managed brokerage accounts.

Briefly explain what’s involved in the steps of opening a brokerage account:Apply:Initiate a deposit: Verify a transaction:

What does it mean when someone says “Good investing is boring”?

All of the following are recommended strategies for beginner investors EXCEPT…

Which of the following is a characteristic of a brokerage account?

Ava is a recent college graduate. She realized she has some extra money in her budget and would like a way to invest it while also having access to it should she need cash. What would be best for Ava?

Remi contributes as much as he can to his employee-sponsored 401k and personal IRA. He would like to make more investments in individual companies to try and increase his long-term earnings. What would be best for him?

Naomi would like to invest for retirement but doesn’t want to worry about paying taxes every year. What would be best?

Ira is ready to take on some more risky investments and would like to start exploring options trading. What would be best?

Briefly explain what’s involved in the steps of opening a brokerage account:Apply:Initiate a deposit: Verify a transaction:

Use the section titled “Risk Tolerance” to answer these questions:
How can too little risk affect your investing experience?
How can too much risk affect your investing experience?

Use the section titled “Risk Tolerance” to answer these questions:
How can too little risk affect your investing experience?
How can too much risk affect your investing experience?

Briefly explain what’s involved in the steps of opening a brokerage account:
Apply:
Initiate a deposit:
Verify a transaction:

Briefly explain what’s involved in the steps of opening a brokerage account:
Apply:
Initiate a deposit:
Verify a transaction: