Students are introduced to investment risk—the chance of losing some or all money invested. That is, the actual rate of return on an investment may vary from the projected rate of return and may even be negative. Students investigate the trade-off between the expected rate of return on an investment and the risk. Finally, they play the role of investors in a simulation that shows how time and diversification may lower risk.
The Making Personal Finance Decisions curriculum teaches valuable personal finance lessons grounded in economic theory. The curriculum is divided into 10 themed units, with each unit containing two lessons. The twenty individual lessons employ a variety of teaching strategies designed to engage students in the learning process and equip them with the knowledge and skills necessary to make informed personal finance decisions. Managing Risk—Time and Diversification is lesson 8A of Unit Eight: Investing.