Grade: 4 Lesson # 6

What’s the difference between saving and investing?

How does investing in the stock market make your money grow over time?

SS.4.FL.5.1Explain that after people have saved some of their income, they must decide how to invest their savings so that it can grow over time.

SS.4.FL.5.2 Explain that a financial investment is the purchase of a financial asset such as a stock with the expectation of an increase in the value of the asset and/or increase in future income.

Correlated Literacy Standards:

LAFS.4.L.3.5 Recognize and explain the meaning of common idioms, adages, and proverbs

LAFS.4.RI.3.7 Interpret information presented visually, orally, or quantitatively and explain how the information contributes to an understanding of the text in which it appears.

LAFS.4.RI.3.8 Explain how an author uses reasons and evidence to support particular points

in a text.

SS.4.FL.5.1 Explain that after people have saved some of their income, they must decide how to invest their savings so that it can grow over time.

SS.4.FL.5.2 Explain that a financial investment is the purchase of a financial asset such as a stock with the expectation of an increase in the value of the asset and/or increase in future income.

Investing in the Stock Market

Lesson Number: 6

Correlated Florida Standards (See Full Text on Cover Page)

  • LAFS.4.L.3.5
  • LAFS.4.RI.3.7
  • LAFS.4.RI.3.8

Essential Questions

  • What’s the difference between saving and investing?
  • How does investing in the stock market make your money grow over time?

Learning Goals/Objectives

  • Explain the difference between saving and investing
  • Understand how the stock market works
  • Identify stock market trends and their return on investment over time
  • Identify common misconceptions about millionaires

Overview

  • Students will explore the differences between saving and investing. They will analyze how the stock market works; monitoring stock trends over time, and will learn how to determine returns on investment over time. Students will explore misconceptions about millionaires and will consider the possibility of saving a million dollars through the aid of an interactive investment calculator.

Materials

  • PowerPoint Presentation: Investing in the Stock Market (lesson plan embedded into PPT notes)
  • Handout: Investing in the Stock Market (optional) Included

Note: PowerPoint included in Lesson File

Time

  • 30 minutes

Activity Sequence

INTRODUCTION/HOOK (5 min)

  • Display PowerPoint presentation slides 1-4. Tell students that today’s lesson will explorethe differences between saving and investing, and will explore the stock market. Probe students’ prior knowledge about financial investing.

ACTIVITY (20 min)

  1. Discuss PowerPoint presentation slides 5-6. Refer to embedded presenter notes. (2 min)

Do: Explain the difference between saving and investing. Saving involves setting aside a portion of income and letting it accumulate over time, returns on savings are minimal. Investing involves purchasing assets with the intent of it accumulating value over time, involves more risk but usually greater return over time.

Say: So how does the stock market work? There are two types of companies private and public. Public companies are owned in part by the public through the trading of stocks – or units of ownerships referred to as shares. People buy stocks with the expectation of an increase in its value over time, then resell it to make a profit.

When a company’s profits go up, so does your “share” in those profits. When a company’s profits decrease, so does the price of your stock. In the stock market, prices rise and fall every day. When you invest in the stock market, you are hoping that over the years, the stock will become much more valuable than the price you paid for it.

  1. Discuss PowerPoint presentation slide 7. Refer to embedded presenter notes. (2 min)

Say: Most stocks in the U.S. are traded on the New York Stock Exchange and what is commonly called the NASDAQ (National Association of Securities and Dealers Automated Quotations). Trading at the New York Stock Exchange happens in an actual place, a building on Wall Street in New York. There are exchanges too such as the NASDAQ, Dow Jones, and S&P 500.

Do: Have students analyze a graph that shows a stock’s value over a five year period. What trends are noted? Ask students if this would be a good stock to invest in. Have them explain why or why not. (LAFS.4.RI.3.7)

  1. Discuss PowerPoint presentation slides8-11. Refer to embedded presenter notes. (7 min)

Do: Guide students in selecting one of the following six stocksinwhich to invest $1000. You may randomly assign a stock per student or have students select a stock of preference. If students select a stock of preference, probe students to explain the rationale for selecting stock. Was price per share a factor in their decision, how about brand? (May use optional handout – Investing in the Stock Market)

Show students the maximum number of shares of each stock they can purchase with $1,000. If time permits students can solve the math equation, otherwise provide answers from slide.

Guide students through monitoring the increases and decreases of each stock’s price over a three month period. If time permits have students fill in chart with their selected stock to determine if there is a profit or loss when the stock is sold three months later. Encourage students to compare the initial price with the final price in determining if there is a profit or loss.

Have students answer the following questions:

  1. Given $1000, which stock allows you to purchase the most shares? (Chevron, the least expensive, 11 shares)
  2. What stock resulted in a loss after three months? (McDonalds)
  3. What stock resulted in no gains? (Facebook)
  4. What stock yielded the greatest gains? Was this a surprise? (Amazon, yes – as only one share was purchased.)

Ask: What did you learn about investing in the stock market?

  1. Discuss PowerPoint presentation slides12. Refer to embedded presenter notes. (4 min)

Do: Tell students they will be watching a brief video segment which highlights how two fourth graders earned big playing a fantasy stock market for one school year. Encourage students to take notes.

Have students discuss the video by answering the following questions:

  1. What two stocks did Timothy and Ethan invest in? (Apple and Macy’s)
  2. What was their largest holding? (Apple)
  3. What percentage return did they earn on their $100,000 investment? (50%, or $50,000)
  4. Do you think Timothy and Ethan will make wise financial choices in the future? What evidence from the video clip supports your inference? (The boys mention saving their earnings to help pay for college someday rather than spending it now.)

Say: Investing in the stock market is one way of making your money grow over time. There are risks involved with all investments, however, over the long term the return is far exceeds the risk.

  1. Discuss PowerPoint presentation slides 13-14. Refer to embedded presenter notes. (3 min)

Ask: Who would like to have a million dollars someday? Here’s a fun true and false quiz to see if you know the truth about millionaires. Ready?

  • Question 1: Most millionaires inherit their money. (False, only 19% were given any money or wealth from family.)
  • Question 2: Millionaires don’t actually work. They have people who work for them. (False, most work more than 45 hours a week.)
  • Question 3: Most millionaires are college graduates. (True, 4 out of 5 are college graduates. 24% have a masters or doctoral degrees and 14% have earned medical or law degrees.)
  • Question 4: There is a good possibility that you can be a millionaire. (True, if you stick to a savings plan – let’s say you invest $3000 each year from age 21 to 64 when you want to retire and earn 8% you will retire with a million bucks!)
  • Question 5: Many poor people become millionaires by winning the lottery. (False, the chances of winning the lottery are 1 in 17 billion; you have a better chance of being struck by lightning – chances of that are 1 in 9 million.)
  1. Discuss PowerPoint presentation slides 15-16. Refer to embedded presenter notes. (2 min)

Say: Now we are going to use this millionaire calculator to determine how many years it will take you to become a millionaire by investing.

Do: If time permits, try a few scenarios.

  • Scenario 1: $1,000 per year, invest in a savings account
  • Scenario 2: $1,000 per year , invest in the stock market
  • Scenario 3: $3,000 per year, invest in the stock market

CLOSURE (5 min)

Do: Have students orally answer lesson review questions on slide 16 and revisit the proverb and cartoon on slide 17. Compare how students’ impressions have changed after the lesson.

Say: Let’s find out what you have learned saving and investing in the stock market by answering the following questions:

  • Question 1: What is the difference between saving and investing? (When you save you put money aside and it grows over time, because you put it there, not the bank. When you invest you use some of your money to try to make it grow for you. Investing is riskier than saving but it provides greater return for your money.)
  • Question 2: How does the stock market work? (When you invest in the stock market, you purchase shares in a company with the hope that it will accumulate value over time. You make a profit by selling your stock at a higher rate.)
  • Question 3: What fact did you find most interesting about millionaires?

• Most didn’t inherit their wealth.

• Most work hard for their money.

• Most are very well educated.

• If you save/invest wisely, you can have 1 million in the bank by retirement.

• Don’t count on winning the lottery to become a millionaire.

OPTIONAL EXTENSION SUGGESTION/HOME LEARNING

Saving and Investing Practical Money Skills Activities

SOURCES/BIBLIOGRAPHIC INFORMATION THAT CONTRIBUTED TO THIS LESSON:

Lesson adapted from The Mint Lesson Plan: Investing

YouTube Video: CNN Report: How Fourth Graders Beat the Stock Market

US Securities and Exchange Commission Website: How to Save and Invest

Handout

INVESTING IN THE STOCK MARKET

DIRECTIONS: You have just been given $1000.00 to invest in one ofthefollowing stocks. Let’s find out which stock will yield the greatest return in a three month period. Use PowerPoint slide 11 to track your stocks activity. / / Facebook
NYSE: $106.80
(0.46)(0.42%) / / Chevron
NYSE: $90.69
(0.55)(0.60%) / / Disney
NYSE: $106.54
(0.54)(0.50%)
/ McDonalds
NYSE: $119.70
(0.37)(0.31%) / / Apple
NYSE: $107.71
(1.03)(0.95%) / / Amazon
NYSE: $688.50
(5.47)(0.79%)
Stock / # of Shares & Price / Month 1 / Month 2 / Month 3 / Profit/Loss @ Sale
/ Shares
Price
Stock / # of Shares & Price / Month 1 / Month 2 / Month 3 / Profit/Loss @ Sale
/ Shares
Price
Stock / # of Shares & Price / Month 1 / Month 2 / Month 3 / Profit/Loss @ Sale
/ Shares
Price
Stock / # of Shares & Price / Month 1 / Month 2 / Month 3 / Profit/Loss @ Sale
/ Shares
Price
Stock / # of Shares & Price / Month 1 / Month 2 / Month 3 / Profit/Loss @ Sale
/ Shares
Price
Stock / # of Shares & Price / Month 1 / Month 2 / Month 3 / Profit/Loss @ Sale
/ Shares
Price