Using activities and examples, explain how money can be divided among the basic investment building blocks to develop an asset allocation strategy to help meet long-term goals.
The three building blocks to developing an asset allocation strategy—cash, bonds, and stocks—are introduced as well as the idea that each investment type has a risk (the danger of losing money) but also a reward (the chance to make money). Kids explore risk tolerance, or how much investment risk they’re willing to accept.
An investment mix can shift based on a time horizon. Kids are reminded as they get closer to needing their money that they will likely need to rebalance their investment building blocks to reduce risk. Mutual funds and 401(k) plans are introduced as ways to start investing.
By plotting financial goals along their time horizon, kids can figure out whether a goal is a short, medium or long-term. Asking questions, like how long they have to save for each goal and how long they need their money to last, can help kids consider choices that can pay off.
By plotting financial goals along their timeline, kids can figure out whether a goal is a short-, medium-, or long-term. Asking questions, like how long they have to save for each goal and how long they need their money to last, can help kids consider choices that can pay off.
Kids can start thinking about the things they would like to spend money on now and in the future and figure out which investment strategy will help achieve their goal: saving, investing or both.
View lesson pages and activities here or download the full Student Workbook. Remember to check the Teaching Guide to know the vocabulary and takeaways for this lesson as well as questions to ask when reviewing concepts with young people.
All materials are free and downloadable PDFs, so you easily use what works for you.
Asset Allocation is broken into two lessons:
Taking a Sensible Risk
It's been two years since Nikki finished her masters and is learning more about preparing early for retirement. Read about the guidance she receives at work about developing an asset allocation strategy to achieve long-term financial goals.
Finding the Right Mix
Even though Nikki is all grown up, she still gets advice from her grandparents. Follow their conversation and learn the important questions to ask when planning for retirement.