Economics

 
Pillar Four
Investing Money

 

Why is Washington, DC like money you put in the bank? ... Because they are both capital!

There are many internet sites for investing in the stock market. While I focus on the stock market, any good portfolio will need to be "diversified" into several types of investments: bank accounts, bonds, stocks, perhaps even real estate. All of these types have different levels of risk and therefore differing levels of return. That way, you distribute your risk and your earning potential among different types of capital.

For our purposes you should log onto Kiplinger's Investment site to learn the four questions you need to ask before you invest. Then use their stock picker tool to learn about how to invest and how to read stock exchange information. You can think about what criteria you would chose for investing: growth, price ratios etc. One 13 year old investor's advice is to ask your friends and see what they like and then check out those companies. (Berg, Adrianne, The Totally Awesome Money Book for Kids, p. 57.) For the "Straight Dope" on how to fathom the stock pages and how the stock market works you might check out this link: "How does the stock market work?"

Investing Exercise

 

After you have done the background research, you should log onto Mr. BigShot and click on the demo of the game. Go through it several times and print out pages with your earnings. Try different levels of risk, as well as different lengths of ownership in the stock (e.g. sell quickly or hold over time). We'll see who is an investing Big Shot!

source: http://news.bbc.co.uk/media/images/38098000/jpg/_38098736_wallstbbc300.jpg

Risk
-- Why does your bond get serious when you cash it in? ... Because it reached its maturity date!!! Evaluating risk is a personal process and each investor's risk tolerance will differ. The basic rule of thumb is that the more risk, the greater the return should be. However, each individual evaluates the return necessary to take on the risk differently. How much risk would you take with your investments? Download the following investing worksheet and see ...
More on Investing

If you liked Mr. Big Shot and you want to try your hand in a more realistic simulation game, try going head to head with other students in anon-line stock investing game, Stock Quest. The process is free and can give you experience without the risk! Read the instructions and log in here to play.

You can take your expertise and win prizes and certificates, too. You might want to try the following site a Virtual Stock Exchange as this game will provide an experience with multiple investors in different sites, thereby more closely modeling the real stock market. If games aren't your thing, there is even an on-line course in investing (they'll send you a certificate at completion time!) called Investing in Your Future After taking that course you're ready to try your hand at winning real money! Fantasy stocks is a game that allows you to compete with other investors on-line to see who can make the most profitable portfolio each month. The winner receives $50! Who knows how much you could make by investing that 50 ...

 

source:http://www.asel.udel.edu/robotics/newsletter/sprsum97/finance.gif

 

After all that practice, maybe you feel free to put some money into the market.

For those of you who feel investing should meet "greener" standards than straight profit and loss, you might check out these funds which are considered "socially responsible."

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