TITLE: PERSONAL INVESTMENTS AUTHOR: Dr. Robert B. Weiss, Juneau-Douglas High School; Juneau, Alaska GRADE LEVEL: Grades 11 & 12 OVERVIEW: Students and most adults have very little working knowledge how best to invest their money or the vocabulary of investments. PURPOSE: To teach students about personal investments in general. OBJECTIVE(s): To familiarize students with: * the vocabulary of investment * the types of investment * the different types of income earned by the different investments * the difference between realized (cash) returns and paper profits MATERIALS: * Current Stock Market Report from a Daily Newspaper * Poster of the Alaska Permanent Fund's Prudent Investment Rule * 15 largest Holding in the Permanent Fund Stock Portfolio * Permanent Fund Rates of Return * Glossary of Investment Terms ACTIVITIES AND PROCEDURES: 1. Tell the class that each student has inherited $50,000. 2. Each student must write what their finance objective is. (College, marriage, children, future business, wealth, retirement) 3. Divide the class in groups of 3 or 4 with similar objectives and ask them to come up with a portfolio of investments to reach their goal. 4. Ask students to define the following terms: Investment, Security, capital, Asset, Stock, bond, and Real Estate. 5. Ask students which of the investments they think is most risky. 6. Tell the students, in order to reduce the risk of investments, it is necessary to diversity. Explain the Prudent Investment Rule. 7. Explain to the students that there is a direct correlation between risk and return. The higher the risk the higher the rate of return. Define the terms: Return, Rate of Return, and Real rate of Return. 8. Have students report on the cost value versus the market value. Which stocks gained the most? Which stocks lost the most? Explain that these are just "paper profits/paper losses" and would not be considered real gains or losses until they are sold. Define the terms: Paper Profit, Unrealized Gains, Income Stock, Growth Stock, and Blue Chip Stock. 9. Have the groups redo their portfolio with balanced investments. Ask for a student from each group to present their portfolio to the class.
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