Unit Overview
Investing is the process of putting money to work in assets that can grow in value or generate income. In practice, investing is about balancing two forces: return (what you earn) and risk (what could go wrong).
This unit introduces the major investment vehicles—stocks, bonds, mutual funds, and ETFs—and explains how diversification and asset allocation help manage uncertainty while pursuing long-term goals.
Learning Objectives
- Explain the difference between saving and investing and when each is appropriate.
- Describe how stocks and bonds generate returns (price changes and income).
- Compare mutual funds and ETFs and explain how they provide diversification.
- Define risk, return, volatility, and why investors demand a risk premium.
- Apply basic diversification and asset allocation principles to a simple portfolio.
Lessons in This Unit
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Lesson 3.1: Investing Basics — Risk & Return
Why returns are never guaranteed, how risk shows up, and what “risk premium†means.
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Lesson 3.2: Stocks
Ownership, dividends, price movements, and the forces that move stock markets.
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Lesson 3.3: Bonds
Credit risk, interest rate risk, yields, and why bond prices move when rates change.
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Lesson 3.4: Mutual Funds
Professional management, diversification, fees, and how fund structures work.
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Lesson 3.5: ETFs
Index investing, liquidity, expense ratios, and how ETFs differ from mutual funds.
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Lesson 3.6: Diversification & Asset Allocation
Reducing risk with portfolio design—correlation, rebalancing, and time horizon.
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Lesson 3.7: Putting It Together — Building a Simple Portfolio
Matching investments to goals, risk tolerance, and timelines using a practical framework.
Unit Assessment
After completing all lessons, students should:
- Complete the Unit 3 Quiz
- Compare two investment options and explain risk/return tradeoffs in 300–500 words
- Create a simple diversified portfolio allocation and justify the choices
Self-Paced Learning Guidance
Investing is learned by doing. As you move through the lessons, practice reading basic charts, comparing fees, and explaining risks in plain language. Focus on process and discipline—not predictions.