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Money        < Previous




If You Don't Know Beans About Investing


Today's Snack: Heat up some refried beans, and top with some shredded cheddar cheese. If you like salsa, that makes a great side for this yummy, filling snack. Drink a glass of milk to go with.





3 paper cups, marked "Low Risk," "Medium Risk" and "High Risk"

(you can print out mailing labels with those terms for large numbers of kids)

At least 20 dry beans per student




We all know a LOT about spending. We can think of LOTS of things to spend our money on!


But many of us know very little about INVESTING. That is how you make your money GROW, so that, eventually, if you have a lot of patience, you can someday buy LOTS more things than you could have bought if you had never invested your money.


If you open a savings account in a bank, you are INVESTING your money - saving it - and patiently leaving it in that savings account so that it can earn interest for you. Over time, you will keep the money you started with in the savings account, plus earn MORE in interest that the bank pays you for the use of your money. So eventually, your savings account BALANCE, or total, will be higher than what you started with.


A savings account in a bank is a LOW-RISK investment. The chances are almost zero that you will actually LOSE the money that you invested in that savings account.


Other kinds of INVESTMENTS can make you even more money than a bank savings account. These may have MEDIUM or HIGH amounts of risk. They also can end up earning you MORE, or LOTS MORE, money than you could have earned with your bank savings account.


But you have to be very careful: there is a chance that the high-risk business that you are investing in may have problems, and actually LOSE money instead of making more. You might wind up with LESS money than you started with - or even NO MONEY!!! That's the chance you take with a high-risk investment.


The high-risk investments are a little dangerous, but they do offer a possibility of really high RETURNS - more money on top of your original investment than you can make with a bank account. That would be AWESOME, if it works out well. But you also have to remember that there is the possibility that you could actually LOSE IT ALL!!!


Maybe the wisest thing to do is to BALANCE YOUR RISK by making SOME investments that are low-risk, SOME that are high-risk, and SOME that are in between, medium-risks.


Of course, if you are a very cautious person, and couldn't stand the thought of losing ANY money, you might make nothing but low-risk investments. You won't make very much extra money, but at least what you have is pretty safe.


On the other hand, if you're a really bold and aggressive person, who can live with the possibility that you might lose it all in exchange for a chance to make big bucks, you might actually gamble - take a huge risk - and put all of your money into high-risk investments.


What kind of an investor are you? Let's play a game to see.


1.                          Each student gets 10 dry beans, and 3 cups marked "Low Risk / Low Reward," "Medium Risk / Medium Reward" and "High Risk / High Reward OR Possible Loss."


2.                          Then they decide how to "invest" their 10 beans into the three cups however they want. They might put all of their beans into the "Medium Risk" cup, split their beans up 3-3-4, or 6-2-2 - whatever seems best to them.


3.                          Then they put their heads down, and the leader goes around and puts 1 more bean in the "low" cups, 2 more beans into the "medium" cups, and 10 more beans in SOME "high" cups, takes away all beans in OTHER "high" cups, etc.


How did your investments work out?


Now discuss investing and demonstrate the mathematical decision-making that a person can do to balance out his or her financial risks. You could describe for them low-risk, medium-risk and high-risk types of ways to make your money grow. Don't forget to talk about the impact of inflation, and other market forces.


By Susan Darst Williams Money 035 2011


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