Money Confident Kids®

Asset allocation

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What you’ll achieve in this lesson  

Using activities and examples, explain how money can be divided among the basic investment building blocks to develop an asset allocation strategy to help meet long-term goals.

Learning objectives you’ll cover

Understand investment building blocks and risk

The three building blocks to developing an asset allocation strategy—cash, bonds, and stocks—are introduced as well as the idea that each investment type has a risk (the danger of losing money) but also a reward (the chance to make money). Kids explore risk tolerance, or how much investment risk they’re willing to accept.  

Sorting out financial goals

By plotting financial goals along their time horizon, kids can figure out whether a goal is a short-, medium-, or long-term. Asking questions, like how long they have to save for each goal and how long they need their money to last, can help kids consider choices that can pay off.  

Pay attention to time horizon

An investment mix can shift based on a time horizon. Kids are reminded as they get closer to needing their money that they will likely need to rebalance their investment building blocks to reduce risk. Mutual funds and 401(k) plans are introduced as ways to start investing.

Know the options

Kids can start thinking about the things they would like to spend money on now and in the future and figure out which investment strategy will help achieve their goal: saving, investing, or both.

Explore this lesson

View lesson pages and activities here, or download the full Student Workbook. Remember to check the Teaching Guide to know the know the vocabulary and takeaways for this lesson as well as questions to ask when reviewing concepts with young people.

All materials are free, and downloadable portable document formats (PDFs) so you easily use what works for you.

Asset allocation is broken into two lessons:

1. Taking a sensible risk

Nikki is two years out of university and learning more about preparing early for retirement. Read about the guidance she receives at work about developing an asset allocation strategy to achieve long-term financial goals.

Start Lesson 1 Activity Sheet

2. Finding the right mix

Even though Nikki is all grown up, she still gets advice from her grandparents. Follow their conversation and learn the important questions to ask when planning for retirement.

Start Lesson 2 Activity Sheet

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