‭Full Year Course‬

‭7.4 Managing Risk‬

‭Lesson Guide‬
‭UNIT: INVESTING‬

‭Learning Objectives‬ ‭Jump$tart Standards‬

‭Students will be able to‬ ‭Investing‬
‭●‬ ‭Explain what risk is and its role in investing‬ ‭●‬ ‭1b: Discuss how a person’s risk tolerance‬
‭●‬ ‭Analyze effective strategies to manage‬ ‭influences their investment decisions‬
‭investment risk‬ ‭●‬ ‭3a: Discuss the advantages and disadvantages of‬
‭●‬ ‭Identify which strategies you might use to‬ ‭investing in riskier assets‬
‭manage risk when you start investing‬ ‭●‬ ‭3b: Investigate the long-run average rates of‬
‭returns on small-company stocks, large-company‬
‭Approximate Time‬ ‭stocks, corporate bonds, and Treasury bonds‬
‭●‬ ‭6b: Discuss the pros and cons of investing in a‬
‭●‬ ‭Lesson length: 105 mins‬
‭diversified mutual fund versus investing in a‬
‭small number of individual stocks‬
‭●‬ ‭6c: Suggest an appropriate asset allocation for a‬
‭very risk averse person versus a very risk tolerant‬
‭person‬

‭Distribute to Students‬ ‭Plan Your Unit‬

‭●‬ ‭Student Activity Packet FY-7.4‬ ‭‬
● ‭ nit Plan for Investing‬
U
‭●‬ ‭Investing on www.ngpf.org‬
‭●‬ ‭Customizable Parent Newsletter: Investing‬

‭LESSON PLAN‬

‭Resources‬ ‭Questions‬ ‭Est. Time‬

‭1‬ ‭DISCUSSION PROMPTS‬ ‭ iscussion Prompt‬

D
‭Write your response to the question. Then, share what you‬
‭5 mins‬

‭wrote with your classmates or a partner.‬

‭1.‬ ‭ ypothetical scenario:‬‭Your teacher rolls a 20-sided‬

H
‭die. You have the opportunity to receive a specific‬
‭amount of money if you correctly guess which‬
‭number is rolled:‬

‭‬
● ‭ uess the number exactly: $500‬
G
‭●‬ ‭Guess even or odd: $50‬
‭●‬ ‭Guess it will fall between 1 and 19: $5‬

‭Which option would you pick and why?‬

‭2‬ ‭VIDEO (4:17)‬

‭●‬ ‭What is Investment‬
‭ hat is Investment Risk?‬
W
‭Risk is bad, right? Actually, when it comes to investing, that’s‬
‭10 mins‬

‭Risk?‬ ‭not always the case. You just have to effectively manage your‬
‭●‬ ‭Publisher: Hargreaves‬ ‭risk. Watch this video to learn about effective risk‬
‭Lansdown‬ ‭management strategies for investing. Then, answer the‬

‭www.ngpf.org‬ ‭Last updated: 6/17/21‬

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 ‭questions.‬
‭❖‬ T
‭ eacher Tip:‬‭The‬ ‭1.‬ ‭Even though risk seems like a bad thing, why is that‬
‭diversification portion‬ ‭not always the case with investing?‬
‭of the video (2:12)‬
‭mentions funds being‬ ‭2.‬ I‭ n your own words, explain the three strategies the‬
‭actively managed by‬ ‭video suggests using to manage risk.‬
‭experts but does not‬ ‭a.‬ ‭Time:‬
‭mention passive‬ ‭b.‬ ‭Diversification:‬
‭funds--students will‬ ‭c.‬ ‭Invest over time:‬
‭learn more about these‬
‭later.‬

‭❖‬ T
‭ eacher Tip:‬‭The‬
‭currency mentioned in‬
‭the video is the British‬
‭Pound, but the content‬
‭translates the same for‬
‭the US dollar.‬

‭3‬ ‭REVIEW‬
‭●‬ ‭The S&P 500‬
‭ he S&P 500‬
T
‭The previous video mentioned three strategies to manage the‬
‭7 mins‬

‭●‬ ‭Publisher: Yahoo‬
‭Finance‬
‭❖‬ T
‭ eacher Tip:‬‭Students‬
‭might not know‬
‭exactly what the S&P‬
‭500 is at this point and‬
‭that’s ok. The‬
‭important part is for‬
‭them to see the ups‬
‭and downs an‬
‭investment can go‬
‭through over time. You‬
‭may wish to briefly‬
‭explain that the S&P‬
‭500 is a popular index‬
‭fund that tracks the‬
‭performance of 500+‬
‭companies in the stock‬
‭market.‬
‭risk that comes with investing. Let’s take a closer look at the‬
‭first one: time.‬
‭Follow the directions to review the past performance of the‬
‭S&P 500, then answer the questions.‬
‭Click the link to view the chart showing the performance of‬
‭the S&P 500, a popular investment vehicle for people looking‬
‭for a relatively safe, diversified investment. At the top of the‬
‭chart be sure to click the “5Y” option--this will give you a look‬
‭at the performance of the S&P 500 over the last five years.‬
‭1.‬ ‭What was the value of a share of the S&P 500…‬
‭a.‬ ‭At the beginning of the 5 year period:‬
‭b.‬ ‭At the end of the 5 year period:‬
‭2.‬ P
‭ retend that you invested in the S&P 500 at the‬
‭beginning of the five year period. Describe any periods‬
‭in time when you would have been tempted to sell‬
‭your investment and explain why.‬

‭4‬ ‭VIDEO (2:53)‬

‭●‬ ‭The Power of‬
‭ he Power of Diversification‬
T
‭Now let’s take a look at the second strategy mentioned in the‬
‭8 mins‬

‭Diversification‬ ‭video to manage investment risk: diversification.‬

‭●‬ ‭Publisher: E*Trade‬
‭ atch the video to learn about the difference between‬
W
‭diversifying by asset class and diversifying across investments,‬
‭then answer the questions.‬
‭1.‬ ‭Explain what it means to diversify by asset class.‬
‭2.‬ ‭Explain what it means to diversify across investments.‬
‭3.‬ ‭The video mentions that diversification doesn’t‬
‭guarantee that if one investment goes down, another‬
‭will go up to make up for it. Why is it still a good idea‬
‭to diversify your investments?‬

‭www.ngpf.org‬ ‭Last updated: 6/17/21‬

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‭5‬ ‭INFOGRAPHIC‬
‭●‬ ‭Diversification Can Be‬
‭Simple or Complex‬
‭●‬ ‭Publisher: Nerd Wallet‬
‭6‬ ‭ACTIVITY‬
‭●‬ ‭DATA CRUNCH: How‬
‭Does Your Asset Mix‬
‭Impact Your Returns?‬
‭●‬ ‭Publisher: NGPF‬
‭7‬ ‭VIDEO (5:45)‬
‭●‬ ‭Is Dollar-Cost‬
‭Averaging Better Than‬
‭Lump Sum Investing?‬
‭●‬ ‭Publisher: TD‬
‭Ameritrade‬
‭8‬ ‭ACTIVITY‬
‭●‬ ‭ANALYZE: Dollar-Cost‬
‭Averaging In Action‬
‭●‬ ‭Publisher: NGPF‬
‭9‬ ‭REFLECTION‬
‭●‬ ‭The Day You Start‬
‭Investing‬
‭●‬ ‭Publisher: NGPF‬
‭www.ngpf.org‬
‭ iversification Can Be Simple or Complex‬
D
‭Talking about diversification is great, but what does it look‬
‭5 mins‬
‭like? Take a look at this pie chart to see a visual representation‬
‭of basic, intermediate, and advanced levels of diversification,‬
‭then answer the question.‬
‭1.‬ ‭Which level of diversification would help you minimize‬
‭your risk MOST:‬
‭a.‬ ‭Basic‬
‭b.‬ ‭Intermediate‬
‭c.‬ ‭Advanced‬
‭Explain why:‬
‭2.‬ L
‭ ist any questions you have about what it means to‬
‭move between basic, intermediate, and advanced‬
‭levels of diversification.‬
‭ ATA CRUNCH: How Does Your Asset Mix Impact Your‬
D
‭Returns?‬
‭15 mins‬
‭Let’s continue to explore diversification by taking a look at how‬
‭it affects the returns on your investment. Analyze the data and‬
‭answer the questions on this worksheet to complete the Data‬
‭Crunch.‬
I‭ s Dollar-Cost Averaging Better Than Lump Sum Investing?‬
‭Finally, let’s look at the third strategy to manage investment‬
‭10 mins‬
‭risk: spreading out your investments over time.‬
‭ ne way to do this is by using a strategy called Dollar-Cost‬
O
‭Averaging. Watch this video to learn how it works compared to‬
‭Lump Sum Investing, then answer the questions.‬
‭1.‬ ‭In your own words, explain the difference in how a‬
‭person invests their money using dollar-cost averaging‬
‭versus lump sum investing.‬
‭2.‬ ‭How does the amount of risk you take on differ‬
‭between dollar-cost averaging and lump sum‬
‭investing?‬
‭3.‬ ‭Describe a situation in which a person would want to‬
‭use dollar-cost averaging to minimize risk in their‬
‭investment.‬
‭ NALYZE: Dollar-Cost Averaging In Action‬
A
‭Now that we’ve seen the benefit of dollar-cost averaging and‬
‭35 mins‬
‭how it can help minimize risk, let’s take a look at the numbers‬
‭in action! Follow the directions on the worksheet to complete‬
‭the activity.‬
‭ he Day You Start Investing‬
T
‭Now that you’ve learned about risk and strategies to help you‬
‭5 mins‬
‭minimize it, think about when you will start investing, then‬
‭answer the questions.‬
‭1.‬ ‭Describe how easy or difficult you feel it will be to leave‬
‭your investments alone for at least five years. Explain‬
‭why. How can you remind yourself of the benefits of‬
‭staying invested for the long term?‬
‭2.‬ ‭Do you think you’ll be more focused on diversifying‬
‭within a specific asset class or across multiple asset‬
‭Last updated: 6/17/21‬
‭3‬
 ‭ lasses? Why?‬
c
‭3.‬ ‭Based on your risk tolerance, which strategy do you‬
‭think you would use--dollar-cost averaging or lump‬
‭sum investing? Explain your reasoning.‬

‭10‬ ‭EXIT TICKET‬ ‭ xit Ticket‬

E
‭Follow your teacher’s directions to complete the Exit Ticket.‬
‭5 mins‬

‭❖‬ T
‭ eacher Tip:‬‭To access‬
‭this Exit Ticket, please‬
‭see the Sample‬
‭Completed Student‬
‭Activity Packet (SSAP).‬
‭You can find this on the‬
‭Unit Page‬‭this resource‬
‭is in.‬

‭EXTEND THE LEARNING‬

‭DO MORE...‬ ‭LEARN MORE...‬

‭INTERACTIVES‬ ‭ARTICLE:‬
‭●‬ ‭Quizlet Vocabulary | Investing‬ ‭●‬ ‭A Beginner’s Guide to Hedging‬
‭●‬ ‭Publisher: NGPF‬ ‭●‬ ‭Publisher: Investopedia‬

‭‬
● ‭ hat’s Your Risk Tolerance?‬
W ‭QUESTIONS OF THE DAY‬
‭●‬ ‭Publisher: NerdWallet‬ ‭●‬ ‭If you invested $1,000 in Netflix stock 10 years‬
‭Tip: Scroll down to the questionnaire‬ ‭ago, what would it be worth now?‬
‭●‬ ‭Publisher: NGPF‬
‭ACTIVITIES‬
‭●‬ ‭INTERACTIVE: Exploring Asset Classes‬ ‭●‬ ‭ ow much would a $100 investment in Warren‬
H
‭●‬ ‭Publisher: NGPF‬ ‭Buffet’s company in 1964 be worth in Nov. 2020?‬
‭●‬ ‭Publisher: NGPF‬
‭‬
● ‭ ATH: Standard Deviation of Stocks and Bonds‬
M
‭●‬ ‭Publisher: NGPF‬

‭‬
● ‭ ATH: Rule of 110 and Function Composition‬
M
‭●‬ ‭Publisher: NGPF‬

‭FAST FACTS...‬
‭●‬ ‭ ccording to a recent study on project risk management trends, 92% of surveyed CEOs agreed that‬
A
‭information about risk is important or critical to long-term success. However, only 23% believe they have‬
‭comprehensive information about risks to their business. (Safran, 2021)‬
‭●‬ ‭Beta is a concept that measures the expected move in a stock relative to movements in the overall market. A‬
‭beta greater than 1.0 suggests that the stock contains a higher risk than the broader market, and a beta less‬
‭than 1.0 indicates a stock with lower risk. (Investopedia, 2021)‬

‭www.ngpf.org‬ ‭Last updated: 6/17/21‬

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