We watched this video to jumpstart today’s class on investing. It’s about the basics of wealth building: buy more things that make money, like mutual funds, and fewer things that lose money, like ipods.
When they finished, one student announced he disagreed with almost everything in the video. The rest of the class was like, “Whaa-?”
He began to argue that a bunch of the things the video described as “money losers” actually DO appreciate – like classic cars that are worth more later because they are collectibles.
As I drew breath to try to explain the videos views, a tiny, quiet girl in the back fired back, “All new cars lose 20% of their value as soon as you drive them off the lot.” Another jumped in, “Most cars aren’t collectors, and you can only make money if there’s someone willing to buy them.” A third launched herself, “Yeah, it’s a rare case that cars appreciate in value, and besides, wouldn’t you want something that less risky than a car?” I LOVE when my class teaches itself for me.
After a week and a half of our finance unit, they’ve learned the basics of checking, savings, car loans, mortgages, student loans, credit cards, and credit scores. Today we looked a stocks and mutual funds, and risk management. They understand why classic cars aren’t the best place to invest for retirement, and that credit cards can easily get you in over your head if you don’t know how to budget. They can tell me the major difference between a 401(k) and a Roth, how to find out how much financial aid a college gives away, and they can read a prospectus for Johnson and Johnson and tell me whether it is a good stock to think about. They’ve seen what a grown-up person’s budget looks like, and many have asked their parents questions and reported all the things they learned, like why collectors are nasty or that someone’s mom is still paying student loans while her daughter is in college. Mostly, they’ve discovered how important it is to start saving early, and to live on less than they make, and that if they save correctly, they can retire millionaires – even if their parents are on food stamps. They grasp the concept of risk versus return, and can cross their hearts and hope to die that they won’t put their money somewhere they don’t understand. I’m so proud.
Next week: back to English literature…