Developing a Financial Investment Portfolio

Student Version
Projector Version

Students are given brief descriptions of three individuals. They act as financial advisors and develop a financial investment portfolio for each client using internet references as they analyze various saving options. The internet web sites assist students by providing information regarding their choices for the portfolios. Students may track the portfolio over several weeks to assess their investment strategies.

Introduction

This lesson is an extension for use with Lesson 12, All Savings Choices Involve Risk: Grandma’s Gift, and Lesson 14, How to Choose a Stock , from Learning from the Market.

CertificateThis lesson is designed to help the students build on the skills and knowledge introduced in Lesson 12 and 14. After completing these lessons, students are able to consider various options of savings options including passbook savings accounts, certificate of deposits, U.S. Government Securities, and corporate bonds and stocks — recognizing that each option involves an element of risk. The higher the expected return, generally, the higher the risk to the saver. They also know how to match stock selections to stock purchasing strategies and how to obtain information about various stocks.

Learning Objectives

  • Create an investment portfolio.
  • Use the internet to locate information.
  • Analyze stock and other saving choices.
  • Identify appropriate stock selection strategies.

Resource List

Process

After teaching Lessons Twelve and Fourteen from Learning from the Market, tell students they are going to apply what they have learned by serving as financial advisors.

Money SignDivide students into groups and assign each group one of the clients listed below.

  • Client A has $25,000 to invest over a 10-year period. Her goal is to make money to help pay for tuition when her children begin college. She wants to find investments that will generate returns greater than the money market.
  • Client B is 15 years old. She has been given a gift of $10,000 to start an investment account in the stock market to build toward the future. One thing to consider is how much risk should be allowed. Also, given the age of the investor, is she more likely to assume more risk than an older person? If yes, why?
  • Client C has $100,000, is 50 years old, and wants to build a stock portfolio that will assist him when he retires at age 65.

Tell students that as financial advisors they are to develop a financial investment portfolio for their client. This portfolio may include stocks, corporate bonds, government securities, certificate of deposits and money market accounts. Distribute copies of the following to serve as reference materials for the students: Activity 1 from Lesson 12 and Visual 2 and Activity 2 from Lesson 14 . Point out that various internet sites and the print sources listed below can be helpful for people doing research.

Internet sites :

www.cnbc.com
www.msnbc.msn.com/
www.nasdaq.com
www.bigcharts.com
www.hoovers.com
www.nyse.com
www.aol.com
http://money.cnn.com/
www.investorguide.com
www.sec.gov/edgarhp.htm
www.nytimes.com

Print sources:

Business Week Guide to Mutual Funds (seventh edition).
J. M. Laderman, 1997, McGraw-Hill

How to Invest: a Guide to buying Stocks, Bonds, and Mutual Funds.
Standard's & Poor's

Understanding Wall Street (third edition).
Jeffrey B. Little and Lucien Rhodes, 1991, Liberty Hall

Your Guide to Understanding Investing.
K. M. Morris, A. M. Siegel, and V. B. Morris, 1997, Lightbulb Press

Tell the students that each group will report on their clients' portfolios giving a rationale for their investment strategies. Allow time for the groups to share their portfolios. Instruct students to track their clients' portfolios over a period of time and compute contributions and accumulations of portfolio investments.

Conclusion

BriefcaseWith background knowledge from lessons 12 and 14, this lesson has helped your students to learn more about financial investment portfolios. Using the portfolios created in class, the students were able to track their clients’ investments for 10 weeks. Tracking investments over time helps financial advisors and clients assess investment choices.

 

Assessment

Have the students answer the following questions after they have completed the lesson. Once they have finished, have them print out their answers and turn them in along with their portfolios.

View Interactive Activity

  1. How well did your client's portfolio perform?
     
  2. Are there any changes you would make in your client's portfolio?
     
  3. What are the changes you would make in your client's portfolio?
     
  4. Why would you make these changes?

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