This article presents readers with seven key lessons John Heinzl, an investment reporter and columnist, has learned from his 20 years of experience as an investor. Students will find this article highly informative, especially if they are already interested in learning about investment strategies.

Getting Started

Appropriate Subject Area(s):

Personal finance, investing.

Key Questions to Explore:

  • Why is investing important? Is it too early to start?
  • How can students improve their saving and spending habits?
  • What are the key takeaways from this article?
  • What is the difference between wealth and income?

New Terminology:

Blue chip stocks, diversification, mutual funds, exchange-traded funds (ETFs), wealth, and income.

  • Blue chip stocks: These are the stocks of large and financially sound companies that have operated for many years. Blue chip stocks tend to make dividend payments and have a market capitalization (total dollar valuation of a company’s outstanding shares) higher than $5 billion.
  • Diversification: This is an effective method to reduce investing risk. Diversification is a way to try to reduce the risk of your portfolio by choosing a mix of investments.
  • Mutual funds: A mutual fund is a collection of investments, such as stocks, bonds and other funds owned by a group of investors and managed by a professional money manager.
  • Exchange-traded funds (ETF): An ETF is a type of fund which owns the underlying assets (shares of stock, bonds, oil futures, gold bars, foreign currency, etc.) and divides ownership of those assets into shares. Shareholders do not own the underlying assets, but they do own the shares.
  • Difference between wealth and income: These two terms are commonly used interchangeably; however, they mean different things. Wealth is the accumulation of valuable resources, subtracting all debt and liabilities. Income is the inflow of cash either in form of wages or investment income.

Materials Needed:

  • Globe article

Book Recommendations:

  • How to Want What You Have by Timothy Miller
  • Your Money or Your Life by Joe Dominguez and Vicki Robin.
Study and Discussion Activity

Introduction to lesson and task:

The main goal of investing is to earn a return on your investment either through capital gains, dividends, interest, or rent. To be successful, one must first acquire the capital to invest, then effectively allocate the capital in a smart way which will generate future returns.

John Heinzl, the writer of this article, provides seven pieces of advice which will encourage students to start thinking about smart investing.

  1. It starts with saving more …: To save more, he proposes that investors should track their spending in order to know in which areas they can cut spending.
  2. … And wanting less: To save more, he proposes controlling material desires and appreciating the many joys in life that don’t require a credit card. Saving before you spend could also help with controlling material desires.
  3. Patience brings profits: the writer believes that investing with a long term view is the way to go. However, this requires patience.
  4. Do it yourself: he proposes investing yourself, as it reduces the cost of investing and eliminates potential conflicts of interest. He states that this method requires high level of discipline to “tune out the noise”. Investors can learn about investing strategies by reading books, newspaper columns, or investing textbooks. Even if you decide to use the help of an adviser, being knowledgeable about investing can help in evaluating your advisor’s performance.
  5. Boring equals beautiful: The writer advises investors to own stakes in companies that sell an essential product or produce services that generate recurring cash flows.
  6. Less is more: he believes investors should limit their investing activities. For example, he believes investors should maintain their stake in a good company when there is no good reason to sell it.
  7. Think like a business owner: the writer believes the entrepreneurial spirit is important while carrying out investments.

Action (lesson plan and task):

Give students a copy of the article to read.

Ask students if they are interested in investing. Ask them if they know the benefits of investing from an early age. (Hint: Investing from an early age gives them more time to accumulate wealth.)

  • Ask students if they know what diversification means.
  • Ask students if they can identify some of the advantages of diversification.
  • Ask students if they know what exchange traded funds are.
  • Ask students if they know what mutual funds are.
  • Tell students what the differences between exchange traded funds and mutual funds are.
  • Ask students if they have spoken to an investment advisor.
  • Explain the role of investment advisors to students.
  • Explain what it means for an investment advisor to have a conflict of interest.
  • Ask students to state how conflict of interests could adversely affect the performance of an investment advisor.
Success and Additional Learning

Success Criteria:

  • At the end of this lesson plan, students should be able to explain the benefits of saving more and spending less.
  • Students should also have a basic understanding of diversification.
  • Students should be willing to learn more about investing.

Confirming Activity:

  • As a confirming activity, ask students to explain why investing is important.