Investing: lesson plans

1. 1

   What is investing?

   Investing is buying things like stocks, bonds and funds that may grow over years. Their value can also fall.

   Students will be able to

   • Save for soon, invest for years away.
   • Stocks are ownership, bonds are loans, funds are baskets.
   • Returns are never promised and can be negative.

   45-minute plan

   1. Warm-up (5 min): is this true? "You need a lot of money to start investing."
   2. Read the lesson together (10 min)
   3. Work the example on the worksheet (10 min)
   4. Practice questions (10 min)
   5. Exit task (10 min): Make two lists: money you will need within the next few years, and money you won't touch for 10 years or more. Only the second list is a fit for investing. Check that the first list sits in insured savings.

   Worksheet and answer keyOpen the lessonCompound growth calculator

2. 2

   How does compound interest work?

   Compound interest means you earn interest on your interest, so money grows faster the longer you leave it invested.

   Students will be able to

   • Growth gets added to the balance.
   • Starting early beats saving more later.
   • The rule of 72 estimates doubling time.

   45-minute plan

   1. Warm-up (5 min): is this true? "I'm too young to worry about saving for retirement yet."
   2. Read the lesson together (10 min)
   3. Work the example on the worksheet (10 min)
   4. Practice questions (10 min)
   5. Exit task (10 min): Open the compound growth calculator on this page and enter what you could invest each month and your years until 65. Try 4% and 7% to see the range, then set up one automatic contribution, even $25, to a retirement account.

   Worksheet and answer keyOpen the lessonCompound growth calculator

3. 3

   What is inflation, and how does it shrink your savings?

   Inflation is prices rising over time. At 3% a year, $1,000 in cash buys only what $744 buys today after 10 years.

   Students will be able to

   • Inflation means each dollar buys a little less.
   • Divide by the price growth to find buying power.
   • Real return is your return minus inflation.

   45-minute plan

   1. Warm-up (5 min): is this true? "Cash under the mattress is the safest place for my money."
   2. Read the lesson together (10 min)
   3. Work the example on the worksheet (10 min)
   4. Practice questions (10 min)
   5. Exit task (10 min): Find the interest rate on your checking and savings accounts and compare it with the latest CPI inflation rate from the BLS. Move cash you don't need for bills into an insured high-yield savings account.

   Worksheet and answer keyOpen the lesson

4. 4

   What is the difference between stocks and bonds?

   Stocks are company ownership that swings more. Bonds are loans that pay interest and swing less. Mix them by time horizon.

   Students will be able to

   • A stock is a small piece of ownership.
   • A bond is a loan that pays interest.
   • Rebalancing puts your mix back on target.

   45-minute plan

   1. Warm-up (5 min): is this true? "Bonds are totally safe, so you can't lose money on them."
   2. Read the lesson together (10 min)
   3. Work the example on the worksheet (10 min)
   4. Practice questions (10 min)
   5. Exit task (10 min): Log in to your retirement account and write down how much is in stock funds and how much is in bond funds. Divide stocks by the total and compare it with the mix you want.

   Worksheet and answer keyOpen the lessonCompound growth calculator

5. 5

   What is an index fund, and why do fees matter so much?

   An index fund copies a market index, so one purchase spreads your money widely at a very low yearly fee.

   Students will be able to

   • The expense ratio is a yearly fee.
   • Small fee gaps add up over decades.
   • Index funds can still lose money.

   45-minute plan

   1. Warm-up (5 min): is this true? "Paying a pro to pick stocks will get you better returns."
   2. Read the lesson together (10 min)
   3. Work the example on the worksheet (10 min)
   4. Practice questions (10 min)
   5. Exit task (10 min): Log in to your 401(k) or IRA and write down the expense ratio of every fund you own. If any charge more than 0.5%, find an index fund in the same account that tracks a similar market and compare its fee.

   Worksheet and answer keyOpen the lessonCompound growth calculator

6. 6

   What is an ETF, and how does it work?

   An ETF is a fund that trades like a stock, so one purchase can buy a slice of hundreds of companies.

   Students will be able to

   • An ETF is a fund trading like a stock.
   • What it holds matters more than the label.
   • You pay a yearly fee plus a small spread.

   45-minute plan

   1. Warm-up (5 min): is this true? "ETFs are a fancy trader thing. Regular people should stay away."
   2. Read the lesson together (10 min)
   3. Work the example on the worksheet (10 min)
   4. Practice questions (10 min)
   5. Exit task (10 min): Look up one broad index ETF available in your IRA or brokerage account. Write down its expense ratio, its number of holdings and its top 10 holdings. If it charges more than about 0.20% for a broad fund, compare it with one or two others.

   Worksheet and answer keyOpen the lessonCompound growth calculator

7. 7

   What is a good expense ratio?

   For a broad index fund, under 0.10% a year is good. Question anything above 0.50% for a plain stock or bond fund.

   Students will be able to

   • Fee in dollars equals balance times the ratio.
   • Under 0.10% is low for index funds.
   • The fee is charged in good and bad years.

   45-minute plan

   1. Warm-up (5 min): is this true? "Less than 1%? That's nothing. Fees that small can't matter."
   2. Read the lesson together (10 min)
   3. Work the example on the worksheet (10 min)
   4. Practice questions (10 min)
   5. Exit task (10 min): Log in to your 401(k) or IRA and write down each fund you own, its balance and its expense ratio. Multiply each balance by its ratio and add them up. That total is what you pay in fund fees each year.

   Worksheet and answer keyOpen the lessonCompound growth calculator

8. 8

   What is diversification in investing?

   Diversification spreads your money across many investments so no single loss can do serious damage.

   Students will be able to

   • One broad fund beats a handful of stocks.
   • More funds is not more diversification.
   • Diversifying can't stop a market-wide drop.

   45-minute plan

   1. Warm-up (5 min): is this true? "I own five different funds, so I'm diversified."
   2. Read the lesson together (10 min)
   3. Work the example on the worksheet (10 min)
   4. Practice questions (10 min)
   5. Exit task (10 min): List every fund and stock you own and what share of your total each one is. If any single company is more than about 10%, make a plan to move part of it into a broad index fund.

   Worksheet and answer keyOpen the lesson

9. 9

   What is a 401(k) and how does it work?

   A 401(k) is a retirement account at work. Part of each paycheck goes in automatically, gets invested and earns a tax break.

   Students will be able to

   • Money goes in before you see it.
   • A traditional 401(k) lowers your tax today.
   • The account is for after age 59½.

   45-minute plan

   1. Warm-up (5 min): is this true? "Putting $100 in my 401(k) means $100 less in my paycheck."
   2. Read the lesson together (10 min)
   3. Work the example on the worksheet (10 min)
   4. Practice questions (10 min)
   5. Exit task (10 min): Log in to your benefits portal and find your 401(k). Check three things: your contribution percentage, which fund your money is in, and who your beneficiary is. If you are not enrolled, sign up at 3% or the match level, whichever is higher.

   Worksheet and answer keyOpen the lessonCompound growth calculator

10. 10

    How does a 401(k) employer match work?

    Your employer adds money when you contribute. Put in at least enough to get the full match before paying extra on debt.

    Students will be able to

    • The formula has a rate and a cap.
    • Contribute up to the cap, at least.
    • Matched money may need time to vest.

    45-minute plan

    1. Warm-up (5 min): is this true? "The 401(k) match is only a few bucks, so it doesn't really matter."
    2. Read the lesson together (10 min)
    3. Work the example on the worksheet (10 min)
    4. Practice questions (10 min)
    5. Exit task (10 min): Log in to your benefits portal and find your match formula, your current contribution rate and your vesting schedule. If your rate is below the match cap, raise it to the cap.

    Worksheet and answer keyOpen the lessonCompound growth calculator

11. 11

    What does vested mean in a 401(k)?

    Your own contributions are always yours. Employer money vests on a schedule, and the unvested part stays behind if you leave.

    Students will be able to

    • Your own contributions are always 100% vested.
    • Employer money vests by cliff or by steps.
    • Leave early and the unvested part stays behind.

    45-minute plan

    1. Warm-up (5 min): is this true? "If I quit before I'm vested, I lose my whole 401(k)."
    2. Read the lesson together (10 min)
    3. Work the example on the worksheet (10 min)
    4. Practice questions (10 min)
    5. Exit task (10 min): Log in to your 401(k) and write down two numbers: your total balance and your vested balance. Then find your vesting schedule in the plan documents and note the date of your next vesting step.

    Worksheet and answer keyOpen the lesson

12. 12

    What is an IRA and how does it work?

    An IRA is a retirement account you open yourself. Anyone with pay from work can use one, and you pick its investments.

    Students will be able to

    • You open an IRA yourself.
    • The account does not invest itself.
    • The yearly limit is lower than a 401(k).

    45-minute plan

    1. Warm-up (5 min): is this true? "My job has no 401(k), so I can't really save for retirement."
    2. Read the lesson together (10 min)
    3. Work the example on the worksheet (10 min)
    4. Practice questions (10 min)
    5. Exit task (10 min): Decide whether you need an IRA: if your job has no 401(k), or you already get your full match, open one at a low-cost online brokerage. Set a monthly transfer, even $50, and choose one broad fund for it to buy.

    Worksheet and answer keyOpen the lessonCompound growth calculator

13. 13

    Should you pick a Roth or traditional retirement account?

    Roth is taxed now and traditional is taxed later, so choose by when you expect your tax rate to be lower.

    Students will be able to

    • Roth is taxed now, traditional later.
    • Equal tax rates give equal results.
    • Contribution limits reset each year.

    45-minute plan

    1. Warm-up (5 min): is this true? "A Roth is always better because the money comes out tax-free."
    2. Read the lesson together (10 min)
    3. Work the example on the worksheet (10 min)
    4. Practice questions (10 min)
    5. Exit task (10 min): Log in to your workplace retirement plan and find two things: your employer's match formula and whether a Roth option exists. If you are not putting in enough to get the full match, raise your contribution to that level now.

    Worksheet and answer keyOpen the lessonCompound growth calculator

14. 14

    How much should you save for retirement?

    Aim for 10% to 15% of pay including the match, or work out your gap: income goal minus Social Security, times 25.

    Students will be able to

    • Plan on 70% to 80% of your pay.
    • Your savings fill the Social Security gap.
    • Multiply the yearly gap by 25.

    45-minute plan

    1. Warm-up (5 min): is this true? "You need a million dollars to retire, so why even try."
    2. Read the lesson together (10 min)
    3. Work the example on the worksheet (10 min)
    4. Practice questions (10 min)
    5. Exit task (10 min): Create or log in to your my Social Security account and write down your estimated benefit at 67. Then subtract it from 75% of your yearly pay and multiply by 25. That is your first retirement number.

    Worksheet and answer keyOpen the lessonRetirement savings calculator

15. 15

    What to do with your 401(k) when you leave a job

    Ask for a direct rollover to an IRA or your new plan. Cashing out early usually costs income tax plus 10%.

    Students will be able to

    • You have four choices for an old 401(k).
    • A direct rollover has no tax withheld.
    • Cashing out early costs tax plus 10%.

    45-minute plan

    1. Warm-up (5 min): is this true? "When I quit, I have to take my 401(k) money out."
    2. Read the lesson together (10 min)
    3. Work the example on the worksheet (10 min)
    4. Practice questions (10 min)
    5. Exit task (10 min): Log in to any old 401(k) you have, or find your last statement. Write down the balance and the plan's phone number. If you have more than one old account, pick where they will all go and open that account.

    Worksheet and answer keyOpen the lessonCompound growth calculator

16. 16

    How do I start investing?

    Build a small cushion, clear high-interest debt, take your 401(k) match, then automate monthly buys of a broad index fund.

    Students will be able to

    • Follow the order before you buy anything.
    • An employer match is an instant return.
    • One broad fund is enough to start.

    45-minute plan

    1. Warm-up (5 min): is this true? "I need thousands of dollars saved before I can start investing."
    2. Read the lesson together (10 min)
    3. Work the example on the worksheet (10 min)
    4. Practice questions (10 min)
    5. Exit task (10 min): Log in to your workplace benefits site and find your 401(k) match formula. Set your contribution to at least the match, and check that the money is invested in a target-date or broad index fund.

    Worksheet and answer keyOpen the lessonCompound growth calculator

17. 17

    What is a brokerage account and how do you open one?

    A brokerage account lets you buy funds and stocks with no limits or age rules, but you owe tax on gains.

    Students will be able to

    • A brokerage account has no tax break.
    • Holding over one year lowers the tax.
    • SIPC covers a failed firm, not losses.

    45-minute plan

    1. Warm-up (5 min): is this true? "You need thousands of dollars and a stockbroker to open a brokerage account."
    2. Read the lesson together (10 min)
    3. Work the example on the worksheet (10 min)
    4. Practice questions (10 min)
    5. Exit task (10 min): Check that your 401(k) match and emergency fund are covered. If they are, look up one online brokerage on FINRA BrokerCheck, read its fee schedule, and open an individual cash account. Link your bank, and set a small monthly transfer and automatic index fund purchase.

    Worksheet and answer keyOpen the lessonCompound growth calculator

18. 18

    What is a target-date fund, and should you use one?

    A target-date fund is an all-in-one mix of stocks and bonds that gets more cautious as its target year nears.

    Students will be able to

    • The year in the name is your retirement.
    • It shifts from stocks to bonds over time.
    • It works best as your only fund.

    45-minute plan

    1. Warm-up (5 min): is this true? "One fund can't be enough. I should add a few more to be safe."
    2. Read the lesson together (10 min)
    3. Work the example on the worksheet (10 min)
    4. Practice questions (10 min)
    5. Exit task (10 min): Log in to your 401(k) or IRA and check whether you own a target-date fund. Note its year, its expense ratio and its current stock percentage. If you also own other funds in that account, add up your total stock share.

    Worksheet and answer keyOpen the lessonRetirement savings calculator

19. 19

    What is asset allocation, and how do you pick yours?

    Asset allocation is your split between stocks, bonds and cash, set by your deadline and how much risk you can handle.

    Students will be able to

    • Time horizon sets how much risk fits.
    • Test your mix with a 30% drop.
    • Each goal can have its own mix.

    45-minute plan

    1. Warm-up (5 min): is this true? "Picking a mix takes an expert and a fancy formula."
    2. Read the lesson together (10 min)
    3. Work the example on the worksheet (10 min)
    4. Practice questions (10 min)
    5. Exit task (10 min): Add up what you have in stocks, bonds and cash across all your retirement accounts and divide each by the total. Compare those percentages with the mix you want, and write your target down.

    Worksheet and answer keyOpen the lessonCompound growth calculator

20. 20

    What is dollar-cost averaging, and does it work?

    Dollar-cost averaging is investing a fixed amount on a schedule, so you buy more shares when prices dip.

    Students will be able to

    • A fixed amount buys more shares when prices fall.
    • Paycheck investing is dollar-cost averaging.
    • A lump sum invested at once often does better.

    45-minute plan

    1. Warm-up (5 min): is this true? "I should wait until the market drops, then jump in."
    2. Read the lesson together (10 min)
    3. Work the example on the worksheet (10 min)
    4. Practice questions (10 min)
    5. Exit task (10 min): Log in to your IRA or brokerage account and set up an automatic monthly investment into one broad index fund, dated for the day after payday. Even $25 a month starts the habit.

    Worksheet and answer keyOpen the lessonCompound growth calculator

21. 21

    How do you rebalance your portfolio?

    Once a year, or when your mix drifts about 5 points, move money back to your target split of stocks and bonds.

    Students will be able to

    • Rebalancing keeps your risk where you set it.
    • Once a year is usually enough.
    • Rebalance where trades aren't taxed.

    45-minute plan

    1. Warm-up (5 min): is this true? "If my stocks are doing great, rebalancing just means selling my winners for no reason."
    2. Read the lesson together (10 min)
    3. Work the example on the worksheet (10 min)
    4. Practice questions (10 min)
    5. Exit task (10 min): List every investment account and its balance in stocks, bonds and cash. Add the totals and divide to find your current mix. If anything is more than 5 points off target, plan the trade in a retirement account, and set a yearly reminder.

    Worksheet and answer keyOpen the lesson

22. 22

    What are dividends and how do they work?

    Dividends are company profits paid to shareholders, often quarterly. Reinvest them for growth, and expect tax in a regular brokerage account.

    Students will be able to

    • Dividend yield is yearly dividends divided by price.
    • A company can cut its dividend anytime.
    • Taxable accounts tax dividends every year.

    45-minute plan

    1. Warm-up (5 min): is this true? "Dividends are free money on top of my investment's growth."
    2. Read the lesson together (10 min)
    3. Work the example on the worksheet (10 min)
    4. Practice questions (10 min)
    5. Exit task (10 min): Log in to your brokerage or IRA and find the dividend setting. If you are saving for the long term, switch it to reinvest for every holding. Then look up your fund's dividend yield and note how often it pays.

    Worksheet and answer keyOpen the lessonCompound growth calculator

23. 23

    What should you do when the stock market drops?

    For long-term money, keep investing on schedule and don't panic-sell. Money needed within 5 years shouldn't be in stocks.

    Students will be able to

    • A loss is permanent only when you sell.
    • Money for the next 5 years stays out.
    • Regular contributions buy more shares when prices fall.

    45-minute plan

    1. Warm-up (5 min): is this true? "The market is crashing, so I should sell everything before I lose it all."
    2. Read the lesson together (10 min)
    3. Work the example on the worksheet (10 min)
    4. Practice questions (10 min)
    5. Exit task (10 min): Write down each investment account and the year you expect to need that money. Move anything needed within the next 2 years to insured savings. Then confirm your automatic contributions are still on, and close the app.

    Worksheet and answer keyOpen the lessonCompound growth calculator

24. 24

    What are the risks of investing in crypto?

    Crypto can lose most of its value fast and has no deposit protection. Only buy what you could afford to lose entirely.

    Students will be able to

    • Crypto has no FDIC or SIPC protection.
    • Only scammers demand payment in crypto.
    • Selling or spending crypto is a taxable event.

    45-minute plan

    1. Warm-up (5 min): is this true? "Crypto is the future, so putting a big chunk of my savings in it is smart."
    2. Read the lesson together (10 min)
    3. Work the example on the worksheet (10 min)
    4. Practice questions (10 min)
    5. Exit task (10 min): If you own crypto, add up what you paid and what it is worth now, and write down the most you are willing to hold. If you don't own any, check that your emergency fund and 401(k) match are done before you consider it.

    Worksheet and answer keyOpen the lesson

25. 25

    How do you choose a financial adviser?

    Pick a fiduciary, know exactly how they're paid, check their record for free, and compare the fee to what you get.

    Students will be able to

    • Ask how they get paid, in dollars.
    • Investment advisers owe you a fiduciary duty.
    • Background checks are free and take minutes.

    45-minute plan

    1. Warm-up (5 min): is this true? "A 1% fee is tiny, so it barely matters which adviser I pick."
    2. Read the lesson together (10 min)
    3. Work the example on the worksheet (10 min)
    4. Practice questions (10 min)
    5. Exit task (10 min): Write down the one money question you most want help with. If you have an adviser already, look them up on Investor.gov and BrokerCheck, then find your total yearly fees in dollars on your last statement or ask for them.

    Worksheet and answer keyOpen the lessonCompound growth calculator

26. 26

    How does Social Security work?

    Work about 10 years to qualify. Your check depends on your top 35 years of pay and your claiming age.

    Students will be able to

    • You need 40 credits to get retirement benefits.
    • Your check comes from your top 35 years.
    • Claiming age changes your check for life.

    45-minute plan

    1. Warm-up (5 min): is this true? "Social Security won't be there for me, so it doesn't matter."
    2. Read the lesson together (10 min)
    3. Work the example on the worksheet (10 min)
    4. Practice questions (10 min)
    5. Exit task (10 min): Create a my Social Security account at ssa.gov. Check that every year of your earnings record looks right, and write down your estimated monthly benefit at 62, 67 and 70.

    Worksheet and answer keyOpen the lesson

27. 27

    What is the 4% rule for retirement?

    Take 4% of savings in year one, then raise that dollar amount for inflation. Your target is 25 times your gap.

    Students will be able to

    • Year one, withdraw 4% of your savings.
    • After that, raise the dollars for inflation.
    • Your target is 25 times your gap.

    45-minute plan

    1. Warm-up (5 min): is this true? "The 4% rule means I take 4% of whatever my balance is each year."
    2. Read the lesson together (10 min)
    3. Work the example on the worksheet (10 min)
    4. Practice questions (10 min)
    5. Exit task (10 min): Write down the yearly spending you'd want in retirement, subtract your Social Security estimate, and multiply by 25. Put that number into the calculator on this page to see the monthly saving that reaches it.

    Worksheet and answer keyOpen the lessonRetirement savings calculator

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