Cents Ability

In order to invest in a stock market, you need to be familiar with the terms and understand statistics and what they represent. I spoke about the the stock ticker, the stock price, the volume which is the number of shares traded in that day, the 52 week range which represents the high and low of the stock prices in the last year, the percentage which shows the change in the stock price from the previous day and other essential statistics that people should familiarize themselves with before investing in a stock market. After explaining the key terms, I read an example to the class and asked how much they would be willing to pay for the lemonade stand. We were cut short on time because of the Thanksgiving schedule. I look forward to hearing what the students are willing to pay and their explanations. Next week is our last lesson. I wish the program was longer because it was a joy teaching the students.

The stock market and all market terminology is not easy information to convey to students without a business background. Yes stock might be ownership in a company and a stock market might be just like a regular market, but it’s hard to overcome some of the layers of complexity. I really tried to tackle making the stock market material as simple as possible this past Wednesday, but I think I did not do my best in tying some of the intricate concepts together. One such idea I did not make as clear as I could have in retrospect was the idea that a stock market is essentially like a market place where buyers and sellers exchange financial instruments. I tried to say that a stock market was similar to an ice cream market in which buyers and sellers traded ice cream, but it is hard to say whether I got my point across. In a way, however, I am thankful because now I really need to go back to this material for next semester and make sure I am spot on. Last week is our last class and I am a little upset. I really look forward to teaching every week. Maybe I should rethink being an accountant J.

This week, I spoke about asset allocation and how you shouldn’t “put all your eggs in one basket.” In other words, you should diversify and invest in stocks, certificate of deposits, bonds and other assets rather than just invest in stocks which can result in you losing all your money. If you diversify, even if one investment brings you losses, other investments can bring you profits.  The class analyzed an example and determined the appropriate asset allocation for an individual. Some of the determinants of where this individual should allocate his assets were liquidity, age, tolerance and uniqueness. We allocated based on three categories- aggressive, moderate and conservative. Aggressive meant that this investor was only interested in earning high profits and did not mind taking a high risk, moderate meant that this investor was interested in a moderate return and moderate risk and conservative meant that this investor was interested in a low return and no risk. The students were engaged in the lesson. I look forward to next week’s lesson.

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I came back to Centability this week after a little hiatus. Two weeks ago, the teacher was absent and last week I had to host an event at Hunter. The material  I covered today was on advanced investments. Specifically, I spoke about asset allocation and why we diversify our assets. But before I dived into the complex details, I tried to ask the students why we need to invest in the first place. In line with what we had taught them in previous classes, they suggested that we needed to invest to meet our goals. While this was certainly true, I imparted that there was an even more basic reason behind investing. Quite simply, we are just not going to be able to work for the rest of our lives. Many of us wont work passed when we can start receiving social security at sixty-five. So without an income, the question then becomes do you want to live off your social security or do you want to live a comfortable life? If you answered the latter, then chances are that you are going to need to invest because just keeping your money under your bed isn’t going to do the trick. I also spoke about how diversification allows you to lower your investment risks. Say you only invested in Microsoft stock and then one day it was revealed that Microsoft had been cooking the books and the company went under? There goes your life’s savings. Wouldn’t it have been smarter to invest different companies, foreign markets or in different types of assets? Yes. While I went into greater depth about these two topics, this was the gist of what I spoke abut. And for the first time since I started working with Centsability, I felt that the students were really engaged. I am excited for next week’s lesson on the stock market.

Today the lesson went well. The students seemed eager to learn about investments and mostly the entire class participated in the discussion and asked questions. I introduced the topic of investments with a quote by David Bach, a personal finance author, who said that financial education should not only be for the rich kids but it should also be taught to the lower class. I agree with the quote because most people will open up a credit card or want to invest in something at some point in their life and if they have the opportunity to learn about investment and finance, they will make better choices and decisions. After reading and discussing the quote, I went into detail about the two primary factors, risk and return, when making an investment decision. Overall, the lesson went well and I was happy to see that students were interested in this topic.

On November 3, all the volunteers met at Washington Irving High School, excited to teach Investments and learned that the teacher was absent. We waited next to the security desk for 20 minutes to find out that the teacher was absent and we would not teach that day. I was upset that we were not notified earlier. Hopefully next time we will be notified of the change and the substitute teacher will be aware to tell the security to let us in.

I was looking forward to teaching a class on investments today, but the teacher was not in. Security wouldn’t let us by without his permission. We have postponed the class till next week, which in some way is great because it gives me more time to prepare. In the slide, the material provides that investments are assets individuals buy to sell at a later point for profit. Why that is true, I also think it is important to touch upon why we invest in the first place. It is really intricately tied to savings. Onwards till next week!