To Save or Not to Save Securities and Investments Finance Lesson Plan
Performance Objective Students will understand the importance of saving and investing. Specific Objective  Students will understand the differences between saving and investing.  Students will understand the concept of compounding to increase investment returns.  Students will identify components of SMART goals as related to setting financial goals. Terms  Security‐a financial instrument that has value  Savings‐an amount saved for shorter‐term use such as for emergencies  Investing‐amount of money saved typically for long‐term use such as college, house purchase, or retirement  SMART goals‐a method of goal‐setting including the SMART acronym components of specific, measurable, attainable, realistic, and time‐bound  PYF (Pay Yourself First)‐a term used in setting financial goals to set aside money on a regular basis for the purpose of saving  Short‐term‐a term of generally one year or less  Long‐term‐a term greater than one year  Time value of money‐the concept that the value of money in the present time is higher than the same amount invested in the future because of its ability to earn interest for a longer period of time  Inflation‐the rate of increase in general prices which causes money to be less valuable  Interest‐money paid for the use of money; borrowers pay interest, those who lend money are paid the interest  Principal‐an amount of money invested  Simple interest‐a percent multiplied by a principal amount  Compound interest‐interest that is calculated on a principal amount plus interest  Rule of 72‐the number of years that it would take for an investment amount to double given a certain interest rate  Liquidity‐ the ease of converting an investment into cash  Mutual funds‐a grouping of different stocks into a fund in which investors can purchase shares, has less risk than individual stocks, may include fees by someone to manage the fund  Bond‐basically a loan that a government entity or corporation makes with investors purchasing the bond with the issuing entity promise to pay back the money with interest Time When taught as written, this lesson should take approximately 3‐4 class periods to complete. Copyright © Texas Education Agency, 2013. All rights reserved. 1 Preparation
TEKS Correlations: This lesson, as published, correlates to the following TEKS. Any changes/alterations to the activities may result in the elimination of any or all of the TEKS listed. 130.164 (b) Knowledge and Skills (2) The student maintains, monitors, controls and plans the use of financial resources in order to perform key duties in the securities and investments industry. The student describes investment analysis and selection processes. The student is expected to: (A) describe types of investment objectives; (B) consider the nature of investment risk; (D) understand factors to consider when selecting investments; Interdisciplinary Correlations: English‐English I  110.31(b)(1) … understand new vocabulary and use it when reading and writing.  110.32(b)(11) … understand how to glean and use information in procedural texts and documents.  110.31(b)(11)(B) … analyze factual, quantitative, or technical data presented in multiple graphical sources. Math‐Algebra I  111.32(b)(1)(E). Interpret and make decisions, predictions, and critical judgments from functional relationships. Occupational Correlation (O*Net – www.onetonline.org/): Job Title: Sales Agents, Financial Services O*Net Number: 41‐3031.02 Reported Job Titles: Investment Officer, Financial Services Representative, Client Manager Tasks: Determine customers' financial services needs and prepare proposals to sell services that address these needs. Make presentations on financial services to groups to attract new clients. Review business trends to advise customers regarding expected fluctuations. Soft Skills: Active Listening, Time Management, Persuasion Copyright © Texas Education Agency, 2013. All rights reserved. 2 Accommodations for Learning Differences It is important that lessons accommodate the needs of every learner. These lessons may be modified to accommodate your students with learning differences by referring to the files found on the Special Populations page of this website. Preparation  Review and familiarize yourself with the terminology and website links  Take a look at the Basics of Saving and Investing 2020 guide if you need additional review References  Investing in Your Future. (2nd ed.). (2007.) Stamford, CT: Cengage Learning.  Bureau of Public Debt, The. (2012). Retrieved from
www.treasurydirect.gov/indiv/tools/tools_moneymathsecret.pdf  U.S. Currency Education Program. (n.d.). http://www.newmoney.gov/education/default.htm  Arizona Corporation Commission. (2012). Investor resources. Retrieved from www.azinvestor.gov/Youth_and_Educators_Teaching_Guides_and_Videos.asp U.S. Securities and Exchange Commission. (n.d.). Tools and games. Retrieved from http://investor.gov/classroom/students/tools‐games Instructional Aids  Lesson Presentation  Instructor Computer/Projection Unit  Online Websites Introduction
The main purpose of this lesson is to help students understand:  The financial goal‐setting process  Considerations when investing money for various purposes  The time value of money Ask students if they know the differences between short‐term and long‐term goals. Ask students if they know how short‐ and long‐term goals can apply to their financial goals. Ask students if they know the differences between saving and investing. Outline
Copyright © Texas Education Agency, 2013. All rights reserved. 3 I. II. Saving A. Also means “Pay Yourself First” B. Usually meant for short‐term financial needs 1. Shopping 2. Minor emergencies C. Easy to get to in the event of an emergency Common Savings Instruments A. Safe places for your money, usually short‐term, lower interest rates, easily accessible B. Savings accounts‐low deposit, very low interest rates, can deposit and withdraw as much as you want C. Money market accounts‐higher minimum deposit to open, slightly higher rate, maximum amount of withdrawals D. Certificates of Deposit‐one initial deposit for a set period of time with no withdrawals (unless there is a penalty), sometimes higher interest with a higher amount III. Investing A. Not the same as saving B. Usually for long‐term (longer than one year) needs C. More risky than a regular savings account D. Potential for higher returns on your money Existentialist Ask students where they think the easiest, most convenient place for their money is so it is available when they need it. They may say “under a mattress, in a piggy bank, or in a jar”. Are these places safe and secure? Will their money grow? ** The instructor is encouraged to go to the following website: www.treasurydirect.gov/indiv/to
ols/tools_moneymathsecret.pdf and use some of the questions and worksheets for math practice on calculating simple interest and compound interest. ** Have students work together to solve some problems. Because financial institutions know that people may need to have easy access to their money in the event of emergencies, interest rates are much lower than for investments. They can be lower than inflation rates (an average rise in prices for many products) which is another reason saving is mainly for short‐term use. Investing is for longer‐term financial goals, so as long as time is on your side, your money has a chance to earn more interest or, in the case of stocks and mutual funds, the odds of the stock prices increasing over the long term are much higher. Multiple Intelligences Guide
Interpersonal Intrapersonal Kinesthetic/ Bodily Logical/ Mathematical Musical/Rhythmic Naturalist Copyright © Texas Education Agency, 2013. All rights reserved. 4 Verbal/Linguistic Visual/Spatial IV. V. VI. Common Investment Instruments A. Riskier than savings, long‐term, higher interest rates, not as liquid B. Less risky to more risky: 1. U.S. Treasury Securities 2. Government Bonds 3. Corporate Bonds 4. Mutual Funds 5. Individual Stocks 6. Real Estate Benefits to Investing A. Financial security for many years B. Time can be on your side‐a longer period to invest can mean higher earnings on your investment C. Can help with inflation if your rate of return (interest rate) is higher than the inflation rate D. If investing in stock, you can become part owner of a company SMART Goals A. Specific ‐ what you would like to achieve or earn B. Measurable ‐ a total amount of money needed to meet the particular financial goal C. Attainable ‐ how the plan to achieve the goal is possible (e.g., a breakdown of the specifics needed to meet the goal) D. Realistic – a reasonable plan of exactly how to raise the money (e.g., a certain amount per week or month) E. Timebound – a specific date or deadline for the goal to be accomplished (e.g., February 1st as opposed to Explain that these types of investments are not as quickly converted to cash when needed compared to savings instruments. The list at the left from #1‐6 ranks instruments from less risky to more risky as well as from more liquid (converted to cash more easily) to less liquid. Explain these benefits to investing as opposed to saving. Usually interest rates are higher than inflation rates so you can be protected from price increases with long‐term investing. ** Have students either participate in an online stock market simulation or a very simple version of your own by tracking one stock for several weeks and comparing your earnings results with what you could have earned in a savings account for the same principal invested. ** Explain to students that what you do with your money will depend upon your financial needs and goals. SMART goals can help students get used to setting specific goals and creating a plan to achieve them. Walk the students through the process and the example SMART goal in the presentation. You can also create a goal on the board or document camera by having students provide their responses. Multiple Intelligences Guide
Existentialist Interpersonal Intrapersonal Kinesthetic/ Bodily Logical/Mathematical Musical/Rhythmic Naturalist Copyright © Texas Education Agency, 2013. All rights reserved. 5 Verbal/Linguistic Visual/Spatial VII. ‘spring’) Simple vs. Compound Interest A. Simple interest $100 x 5% = $5 interest $100 x 5% = $5 interest, so you earned $5 interest so far. B. Compound interest $100 x 5% = $5 interest, but now your principal is $105, so $105 x 5% = $5.25, so the new principal is $110.25, so you earned $10.25 interest so far. ‐also called “interest on interest” VIII. Time Value of Money A. Money is worth more now than later if it is invested now rather than later. B. The investment has more time to grow the earlier it is invested. C. Present Value versus Future Value IX. “Rule of 72” Explained A. Shows how compounding can increase your money more rapidly than simple interest B. A formula that calculates how long it will take your money to double C. 72 divided by the interest rate (say 6% as an example) = 12, meaning it will take approx. 12 years to double your investment The easiest way to demonstrate this mathematical concept is to show students page 1.22 of the Basics of Saving and Investing 2020 guide which compares investing early and the benefits of compounding. You can also mention the concept of the time value of money while you are explaining this. Because many people who are investing their money want to know what the earnings potential is at some point in the future, the “Rule of 72” can provide answers. It can help you estimate how long it will take to double your money. Multiple Intelligences Guide
Existentialist Interpersonal Intrapersonal Kinesthetic/ Bodily Logical/ Mathematical Musical/Rhythmic Naturalist Copyright © Texas Education Agency, 2013. All rights reserved. 6 Verbal/Linguistic Visual/Spatial Application
Guided Practice In pairs, have students create a list of goals that they each have, regardless of whether they involve money or not. Then, have the pairs circle the items that involve money. Of those, ask students to label whether their goals are short‐term or long‐term. Then have them identify each one as either a savings goal or an investment goal. Divide the board into a “Saving” side and an “Investing” side. Write down the pairs’ responses as to which ones should be written on each side and have a class discussion about the differences between the items on each list. Next, ask students how money can be earned. A student should write the responses on the board, which may include part‐time jobs, babysitting, garage sales, selling stocks, and any other responses that students mention. Discuss which ones are the easiest to rely upon and which ones may be more unstable as an income source. Then lead into a discussion of which types of income are short‐term or long‐term. Conduct the S & I Bingo Game #1 to reinforce vocabulary concepts. Write the words on the board or document camera for students to fill in on the blank cards located later in this lesson. Independent Practice  Have students go online and play the “Gen i Revolution” game for practice with simple and compound interest.  Students can write an exit ticket stating something they learned about how to prevent a fraud or scam. Summary
Review Ask students the following questions on exit tickets or using a matching activity. Question #1: Savings is primarily for long‐term financial goals. Answer #1: False. Savings is usually for short‐term goals. Investing is for long‐term goals. Question #2: What is the time frame for short‐term goals? Answer #2: One year or less. Question #3: What is the time frame for long‐term goals? Answer #3: Long‐term is considered one year or longer. Question #4: Simple interest is also known as “interest on interest”. Answer #4: False. Compound interest is “interest on interest” because interest is calculated on the principal and previously‐earned interest. Question #5: What is the purpose of the “Rule of 72”? Answer #5: The “Rule of 72” is a mathematical tool to determine how long it will take for an investment to double based on the interest rate of the investment. Copyright © Texas Education Agency, 2013. All rights reserved. 7 Evaluation
Informal Assessment Any and all of the following can be used as informal assessments :  Exit tickets with vocabulary  Pair‐share activities  Class discussion and participation Formal Assessment  SMART Goal Assignment #1 : Decide on a financial goal you would like to achieve, one that is short‐
term (less than one year) and one that is long‐term. Create a SMART goal explaining each component of the SMART acronym for each of your two goals. Include an appropriate graphic or diagram to enhance this word‐processing document.  Basic Savings Chart Assignment #2 – Students will conduct online research to discover interest rates for at least three different types of accounts at three different financial institutions. They may create a table in a word‐processing program or on a posterboard.  Saving vs. Investing Comic Strip Assignment #3 – Students will use either an online comic strip creator program or posterboard to create a comic strip depicting a conversation among individuals where one is telling the other one the differences between saving and investing, listening to the goals of the other character, and then recommending to that character which actions to take with his or her money. Enrichment
Extension Have students interview a CFP, Certified Financial Planner, with questions from a prepared list. Questions can include: 1) What type of savings vehicle is the most popular with his or her clients?, 2) What is his or her best advice for a teenager regarding how much to save and what type of account to use? 3) What is his or her recommendation on interest your investments should earn so you can have $1,000,000 when you (the student) retires? The student can then prepare a one‐page report detailing the findings. Copyright © Texas Education Agency, 2013. All rights reserved. 8 Student Name __________________ S & I Bingo Copyright © Texas Education Agency, 2013. All rights reserved. 9 To Save or Not to Save Financial SMART Goal Assignment #1 Student Name ______________________ CATEGORY 20 15 8 Required Elements The document includes all required elements as well as additional information. The document includes all required elements. The document Several required includes all but 1 elements were of the required missing. elements. Knowledge Gained Student thoroughly understands the topic assigned. Student adequately understands the topic assigned. Student somewhat understands SMART goals. Attractiveness The document is exceptionally attractive in terms of design, layout, and neatness. The document is attractive in terms of design, layout, and neatness. The document is The document is acceptably distractingly attractive though messy or very it may be a bit poorly designed. messy. It is not attractive. Mechanics Capitalization There is 1 error and punctuation in capitalization are correct or punctuation. throughout the document. There are 2 errors in capitalization or punctuation. There are more than 2 errors in capitalization or punctuation. Grammar There are no grammatical mistakes on the document. There are 2 grammatical mistakes on the document. There are more than 2 grammatical mistakes on the document. There is 1 grammatical mistake on the document. 1 Maximum Points Possible: 100 Student Points: _________ Copyright © Texas Education Agency, 2013. All rights reserved. 10 Student does not appear to understand the purpose of writing SMART goals. To Save or Not to Save Basic Savings Chart Assignment # 2 Student Name ______________________ CATEGORY 20 The chart includes all required elements. 8 1 Required Elements The chart includes all required elements as well as additional information. Knowledge Gained Student can Student can Student can accurately accurately accurately answer answer all answer most about 75% of questions related questions related questions related to to facts in the to facts in the facts in the chart and chart and chart and processes used to processes used processes used create the chart. to create the to create the chart. chart. Student appears to have insufficient knowledge about the facts or processes used to create the chart. Attractiveness The chart is exceptionally attractive in terms of design, layout, and neatness. The chart is distractingly messy or very poorly designed. It is not attractive. Mechanics Capitalization There is 1 error There are 2 errors in and punctuation in capitalization capitalization or are correct or punctuation. punctuation. throughout the chart. Use of Class Time Used time well during each class period. Focused on getting the project done. Never distracted others. 15 The chart is attractive in terms of design, layout, and neatness. The chart includes all Several required but 1 of the required elements were elements. missing. The chart is acceptably attractive though it may be a bit messy. Used time well Used some of the during each class time well during each period. Usually class period. There focused on was some focus on getting the getting the project project done and done but occasionally never distracted distracted others. others. Maximum Points Possible: 100 Student Points: _________ Copyright © Texas Education Agency, 2013. All rights reserved. 11 There are more than 2 errors in capitalization or punctuation. Did not use class time to focus on the project OR often distracted others. To Save or Not to Save Saving vs. Investing Comic Strip Assignment #3 Student Name ______________________ CATEGORY 20 15 8 1 Content Comic strip demonstrates excellent knowledge of topic. Comic strip demonstrates adequate knowledge of topic. Comic strip Comic strip is contains some difficult to follow factual errors. due to lack of content. Action The action flows well and makes sense from one panel to the next. The action flows The action is The action from one adequately from somewhat panel to the next one panel to the inconsistent does not flow at all. next. from one panel to the next. Characters Characters seem Characters are very realistic in adequately all panels. portrayed. Character(s) are Character(s) do not missing or do fit at all with the not relate to the topic. topic. Props (Graphics) Props relate to the topic in all panels. Props are missing in 1‐2 panels but all others relate. Props missing in 1‐2 panels and 1‐2 props do not relate to topic. Props missing in more than 2 panels and are inappropriate in more than 2 panels. Mechanics Captions are well written and contain no punctuation, grammar, or spelling errors. Captions are well written but contain 1‐2 mechanical errors. Captions are slightly incomplete and include 3‐4 mechanical errors. Captions are incomplete and include many mechanical errors. Maximum Points Possible: 100 Student Points: _______ Copyright © Texas Education Agency, 2013. All rights reserved. 12