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Risk and Reward

Category: Games | Age Group: 14-16

TOPIC:

Risk and Reward

RESOURCES NEEDED:

Access to the following website: http://www.21stcenturyinvestoreducation.com/page/tce/courses/course-101/003/001-risk-and-reward.html

LEARNING OPPORTUNITY:

Teenagers need to understand that sometimes a deal is too good to be true. They need to understand how risk and reward are tied closely together so that they will come to understand that they need to use their money wisely or they may very well wind up losing it all for little if any return. This will help them develop a responsible approach to how they use their money.

THE ACTIVITY:
  • Find an appropriate time after dinner and ask your son or daughter to come and play a short game with you in which you will ask them some money questions and
    they will tell you what they would do.
  • Play the pricing game that is found on the website and then look at the explanation of risk and reward that follows.
  • Having done this, talk with your son or daughter about ways they are currently using their money and the degree to which risk is involved. For example, do they buy anything online and, if so, how do they know they are getting what they paid for?
  • Ask them if they would now do anything differently.
TIPS:
  • Some people have a higher “risk tolerance” than others. Discuss how comfortable your child is with taking risks.
FOLLOW UP IDEAS:
  • Talk to them about “Opportunity Cost”—everything you purchase comes at a price but there is also an “additional cost” in that, because you spent your money on this item you do not have your money for something else. What is it you are giving up in order to buy this item and is it worth it?
  • Explore the subsequent detail on the website that looks at investment strategies and the risks involved to prepare your daughter or son to start thinking about investments.
WEBSITES: