PHASE 1: Introduce the Stock Market
Piggy bank
Saving money in a shoebox or piggy bank that stays with you
PROs:
You always know where your money is.
You can use your money whenever you need it.
You always know exactly how much you have.
CONs:
Over time, money loses value. (Think of a grandparent talking about how much hamburgers used to cost.
If you lose your money (theft, fire, etc.), it is gone and you probably can't get it back.
savings account
Holding your money in a savings bank account
PROs:
Your money is protected and insured against theft, fire, etc.
You are guaranteed to grow your money over time at a fixed (permanent) rate.
Your money is used by the bank to help others start businesses, buy homes, etc.
CONs:
There may be penalties for withdrawing too much/any of your money.
The fixed amount of growth is usually small -- between 2 and 5% per year
investing
Purchasing a "share" of a company, idea, event, currency, or even government
PROs:
The growth can be significantly higher than any saving account offers
You can choose the companies/ideas your money works for.
You could be rewarded regularly on top of the growth in your investment.
CONs:
You have to sell your investment in order to access your money.
While the growth possibilities are higher, there is also a risk of losing some or even all of your money
Imagine you HAD $100 to save or invest in 2013
10 years later....
Piggy Bank
$70.43
How is this possible?
Your $100 in 2013 could purchase $100 worth of goods and services in 2013.
But because of inflation (the increase in prices over time), that $100 from 2013 can only purchase $70.43 worth of goods and services in 2023.
Savings Account
$123.20
How is this possible?
Your $100 in a savings bank account increases by (on average) 2.32% every year. Multiply that by 10 years and your $100 in 2013 has earned $23.20.
Stock Market
$0 - ???
Lets look at two different stocks in 2013 and see what might have happened to your $100.
Lets say you used your $100 to buy shares of PARTY CITY. In 2013, one share of PARTY CITY cost $21.27. So, you could have purchased 4.7 shares of stock ($100 divided by $21.27 equals 4.7)
If you sold your 4.7 shares of PARTY CITY stock today (September 2023), your $100 has now become
$0.23 (less than 1 quarter!)
HOWEVER, if you invested your $100 in NIKE in 2013, you would have purchased 3.39 shares of stock (one share of NIKE cost $29.49 in 2013; $100 divided by $29.49 equals 3.39).
If you sold your 3.39 shares of NIKE stock today (September 2023), your $100 has now become
$329.47(more than 3X!!)
****IMPORTANT NOTE****
Investing in the stock market has very little to do the price of a company's stock. Investing in the stock market is about trying to predict the change in a stock's price over time. DON'T PAY TOO MUCH ATTENTION TO HOW MUCH A STOCK COSTS! Let's show you using two examples...Chipotle and ebay:
$1,935.01 per share
One look at this stock price might make you think that Chipotle stock is more valuable than ebay's stock. However, in our stock market game, each student group has a limited amount of money to spend ($100,000). If a student wanted to put their entire $100,000 into Chipotle, they could only purchase about 50 shares (100,000 divided by 1,935 is 51.7). Let's say that at the end of the game in May, Chipotle's stock has increased by 3%. The new price of Chipotle is now $2000 (an increase of about $60). This means that our student has made a total profit of $3,000 (50 shares * $60).
$44.36 per share
Now, if we look at the ebay stock, at under $50 per share, a student can buy a lot more shares -- a whopping 2,270 shares! Let's say that over the course of the year the stock price of ebay increases at the same rate (3%) as our Chipotle example. 3% of $44.36 is $1.33. That means that from September to May, ebay's price has increased from $44.36 to $45.69. If our imaginary student spent all of their money to buy 2,270 shares of ebay, their total profit at the end of the game is $3019.10. So, you see, the price of the stock means very little to our game.
teacher RESOURCES
Use this link to connect the Banzai Junior resource, a budget and financial literacy game for students to learn how to manage money.
Use this link to connect students to an interactive learning resource that introduces concepts behind the stock market.
Use this link to find resources for grades 3-6 that introduce students to concepts surrounding money and investments.
phase 2: create investment teams
Divide your classes into groups of 4-6 students.
Explain to students that now that they understand more about saving and investing money, that they are going to compete with other 5th grade teams in Orange.
First, the teams need to identify their new Investment Company. The company should have a name, list all of its group members, and develop a LOGO that will be how their BRAND is identified. Students who are stumped on a logo can get ideas from the link below.
4. Students register their companies at the link below. Copy and send to teams AFTER they have proven to have created a company name and a DIGITAL logo. ONLY ONE PERSON FROM EACH TEAM REGISTERS THE TEAM!! That person MUST be able upload the logo to the form.
COPY AND SEND TO STUDENT TEAMS TO COMPLETE: https://forms.gle/dzXzmZdFgS5VrE958