Teacher guide · Unit 5 of 13
Investing
Owning, lending, and the low-cost funds that beat most professionals.
- Lessons
- 7
- Reading
- 53 minutes
- Unit quiz
- 5 questions
- Class time
- 2 periods
Class time is a guide: 45-minute periods, with the lessons, the unit quiz and a discussion. Students can read lessons at home and take the quiz in class, or the other way round.
By the end of the unit, students can
- explain where returns on stocks come from, and what makes a share price move
- explain how bonds work, and why a bond’s price falls when interest rates rise
- compare ETFs, mutual funds and index funds, and explain why fees matter so much over decades
- explain why most actively managed funds trail their index
- describe what REITs and commodities are, and the part each can play
The lessons
Each ends with a one-question check, and students who pass the unit quiz can go on to three optional stages of harder lessons, for bronze, silver and gold medals.
- 5.1Stocks8 min
You make money when a company does better than the market already expects.
- 5.2Bonds8 min
A stock makes you an owner. A bond makes you a lender.
- 5.3ETFs7 min
One share, one ticker, a slice of 500 companies at once.
- 5.4Mutual funds8 min
Most actively managed funds underperform their index. Not a slight majority — most of them.
- 5.5Index funds8 min
You cannot control returns. You can control costs.
- 5.6REITs7 min
Own a fraction of a portfolio of buildings without answering a 2am call about a water heater.
- 5.7Commodities7 min
A commodity generates nothing. Its only return is price change.
New Jersey Standard 9.1
The grade 12 expectations this unit teaches, quoted from the state’s standard. See the full alignment for every unit.
- 9.1.12.PB.1Covered
Explain the difference between saving and investing.
In this unit: Stocks, Index funds
- 9.1.12.PB.6Covered
Describe and calculate interest and fees that are applied to various forms of spending, debt and saving.
In this unit: Mutual funds
- 9.1.12.EG.2Covered
Explain why various forms of income are taxed differently.
In this unit: REITs
- 9.1.12.FP.5Covered
Evaluate how behavioral bias (e.g., overconfidence, confirmation, recency, loss aversion, etc.) affects decision-making.
In this unit: Why investors earn less than their funds (Silver stage)
- 9.1.12.FP.7Partly covered
Determine how multiple sources of objective, accurate and current financial information affect the prioritization of financial decisions (e.g., print information, prospectus, certified financial planners, internet, sales representatives, etc.).
In this unit: Reading a fund fact sheet (Bronze stage), Mutual funds, Survivorship bias and overfit backtests (Gold stage)
- 9.1.12.RM.2Covered
Identify types of investments appropriate for different objectives such as liquidity, income, and growth.
In this unit: Stocks, Bonds, REITs
Questions for discussion
- “You make money when a company does better than the market already expects.” Can a great company be a bad investment? Can a struggling one be a good one?
- One fund charges 1% a year and another charges 0.05%. Over 40 years, why does the gap in what you end up with grow far bigger than 0.95%?
- Gold produces nothing: no profits, no interest, no rent. Why do people still buy it?