Mutual Funds

Learning Goals/Objectives:

The students will elaborate on the advantages of mutual funds within a persuasive essay later in the week.
The students will define and cite advantages of the various categories of mutual funds.
The students will demonstrate an understanding of what kinds of mutual funds should be purchased at what time in the saving process through class discussion.
The students will demonstrate understanding through a worksheet what a prospectus is, a front-end, back-end, no-load fund, and how to understand the details of a specific fund.

Grouping of Students:

Methods:

Activities:

“Hook” – What happened today was uncanny! I looked at
everyone’s stocks and almost every group’s greatest investment plummeted! – 5
minutes

a. Direct Instruction (Advantages of mutual funds) – 15
minutes

Define Mutual Funds:

(1) Diversification – relate this to my hook
(2) Professionals managing the fund for you – relate it to
the time and energy they spend on the stock market game
(3) Liquid investment – what does that mean? How is that an
advantage?
(4) Do not need a lot of money to invest.

b. Scavenger Hunt – 10 minutes

Explain that you viewing an online version of a ~Prospectus
– a legal document that offers securities or mutual fund shares for sale. It
must contain the terms, a summary of the fund’s portfolio and investments, its
objectives, and financial statements showing past performance.
Distribute worksheet – (Go to www.mfea.com/FundSelectord/default.asp)
Follow worksheet instructions

c. Direct Instruction – 20 minutes

This should be the point in the worksheet that you need to
guide the students through what the details of the specific fund mean. After
that, explain what the following means:
Front-end load – a sales charge is
sometimes paid when you buy an investment. (2-8%)
Back-end load – a sales charge is
sometimes paid when you sell an investment. (2-8%)
No-load fund – does not charge a
sales fee because salespeople are not involved. You buy these directly from the
company.
All funds have a management fee of
the total assets of 1% - 2%.

d. Comparing a Roth vs. Saving your money – 10 minutes

Go to www.moneychimp.com/articles/rothira/rothcalc/htm
(have this already written on the board)
Walk them through setting up how much money they would have
if they saved $4,000 ($11 a day) a year until age 58. (40 years)
Draw an umbrella as a visual aid for explaining ROTH IRA’s

g. Computer Assisted Learning – 10 minutes

Based on your research, purchase your favorite mutual fund
in the Stock Market Game

Materials:

Assessment:

Download:

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