Mutual Fund Basics
Lesson Topic:
Mutual Fund Basics
Lesson Description:
This lesson should follow discussion regarding basic methods to saving money and basic money management.
This lesson will provide information about the difference of saving money and investing money. A specific emphasis on what a mutual fund is, and how this investing strategy can be used for long-term financial growth.
Learning Goals/Outcomes:
Define Saving Money (short-term)
Define Investing Money (long-term)
Explore the investment strategy of investing in Mutual Funds
Nebraska Standards:
SS 12.2.9.a
SS 12.2.9.b
BMM.HS.5.8.a
BMM.HS.5.8.e
Teacher Planning:
Equipment/Materials/Software Needed:
Internet access. Device and/or projector to view websites and videos.
Time Required for Lesson: 75 minutes
Diagram/Setup: NA
Technology Use:
Software: NA
Hardware:
Internet access and device to view websites and videos.
Instructional Plan:
Anticipatory Set/Pre-Activity:
View and discuss this investment pyramid. Review the short-term savings options on bottom of the pyramid.
Ask students to focus on where the Balanced Mutual Fund block is located.
Discuss the risk vs. reward differences between options from the bottom to the to of the pyramid.
Video: DIFFERENCE BETWEEN SAVING, INVESTING AND SPECULATING
Benefits/Explanation/Real-World Connection:
Understand mutual funds and consider personal choices on how to save for short-term and long-term financial goals.
Activities (i.e. instructions, warm-up, lesson, cool-down):
1) Pre-Activity exploration of the Investment Pyramid.
Video explaining the difference between saving, investing and speculating. (See above)
2) Draw a large circle on whiteboard, or using projector and word processing document, insert a large circle on a blank page.
Ask students to start naming brands, companies, and corporations. As students share, write those companies in the circle. (Nike, Under Armour, McDonald's, etc.) Lead them to naming corporations in a variety of industries. (Fast Food, Clothing, Pharmaceutical, Petroleum, Construction, Technology)
Give this fictitious group of corporations a name. (Example: ABC Mutual Fund or Husky Mutual Fund)
With a green dry erase marker, or green circle on word processing document, circle a majority of the companies within the fictitious mutual fund. with a red marker or circle, circle a few of the companies in the fictitious mutual fund. Explain that statistics indicate that over a ten year period of time, most mutual funds will increase in value.
Discuss and explain the benefit of investing in a large number of companies (stocks) rather than investing in the stock of one company.
Optional Video: INVESTING BASICS: MUTUAL FUNDS
3) Examine a list of mutual fund / fund families available in the United States.
Click on a few familiar funds and view the fund website. Consider researching the history of the fund family. (Example: Vanguard)
4) Click on the American Funds website to complete a handout that explores types of American Funds.
Complete the first fund together as you familiarize students with the terminology and risk level of each fund. Print the handout and access the American funds website to complete the research assignment.
Handout:
Website: AMERICAN FUNDS / MUTUAL FUNDS
Closure:
Orally ask students to explain the results of their research that compares low risk and more aggressive growth mutual funds.
Assessment :
Research assignment: American Funds
Optional: Read current investment news articles. See website and handout below.
Possible website: CNN MONEY / INVESTING
Handout:
Supplemental Information:
Modifications:
Students could work in groups to complete the American Funds research assignment if needed to help low level students.
Safety Precautions: NA
Comments (adaptations for various grades/ages, teaching styles, etc.)
Students can complete lesson in group setting, or could work independently.