What Investing Is — slides
Financial Literacy Club
Investing · Lesson 1
What Investing Is
Saving vs. investing, and why investing involves risk.
10-minute lesson · learnwithflc.org
What Investing Is · 1 / 21
Financial Literacy Club
Investing · Lesson 1
What Investing Is
Saving vs. investing, and why investing involves risk.
10-minute lesson · learnwithflc.org
Today's goals
By the end of class, you'll be able to…
- Distinguish saving from investing
- Explain the relationship between risk and potential return
- Decide whether money belongs in savings or investments based on when it's needed
Warm-up
You receive $1,000. You'll need $400 for a school trip in three months and won't need the rest for ten years. Where would you keep each part?
Think, then write your answer.
The big idea
What Investing Is
Saving vs. investing, and why investing involves risk.
Investing · Lesson 1
Saving means keeping money safe for later — usually in a bank account. Investing means buying something you expect to grow in value or pay you income over time, like part of a company or a loan to a government.
Investing · Lesson 1
The tradeoff is risk and return. Savings accounts are safe, but they grow slowly — sometimes slower than inflation. Investments can grow faster over long periods, but their value goes up and down, and you can lose money.
Vocabulary
Return
What an investment earns or loses, usually shown as a percentage per year. Returns are never guaranteed.
Investing · Lesson 1
A common principle: only invest money you won't need for several years. Money for next semester, a car repair, or an emergency belongs in savings, where it can't drop in value right when you need it.
Investing · Lesson 1
Under 18?
Minors generally can't open their own brokerage account. A parent or guardian can open a custodial account for you. If you have income from a job, a custodial Roth IRA is another option families use.
Investing · Lesson 1
Education, not advice
FLC explains how investing works. It doesn't recommend specific investments. Real decisions depend on your situation — talk with a parent or guardian and a qualified professional.
See it
Saving is for short-term goals and emergencies: it's safe, easy to access, and grows slowly. Investing is for long-term goals: its value moves up and down, it can lose money, and it has historically grown faster over long periods.
| Saving | Investing | |
|---|---|---|
| Best for | Emergencies and near-term goals | Goals 5+ years away |
| Risk | Very low (insured deposits) | Value rises and falls; can lose money |
| Growth | Slow, predictable interest | Can be faster over long periods, not guaranteed |
| Access | Easy, anytime | Selling during a drop can lock in losses |
Real example
Two goals, two homes for the money
Nia has $2,000. She wants to buy a used car in one year, and she also wants to start investing for the long term.
- The car money goes to a high-yield savings account. If the stock market dropped 20% the month before she needed the car, she'd be stuck.
- Later, once her car fund and emergency fund are set, she starts investing a little each month for goals that are decades away — where there's time to ride out ups and downs.
Try it together
Try it: what time can do
Set a small monthly amount and a long time period. Returns here are hypothetical and steady — real ones aren't.
Your numbers
Real returns vary year to year and can be negative.
Results
Hypothetical balance after 40 years
$131,241
Compounded monthly at a constant 7% a year
You contributed
$24,000
Hypothetical growth
$107,241
Growth share
82%
of the final balance
- Your contributions
- Hypothetical growth
Show year-by-year tableHide table
| Year | Contributed | Growth | Balance |
|---|---|---|---|
| 1 | $600 | $20 | $620 |
| 2 | $1,200 | $84 | $1,284 |
| 3 | $1,800 | $197 | $1,997 |
| 4 | $2,400 | $360 | $2,760 |
| 5 | $3,000 | $580 | $3,580 |
| 6 | $3,600 | $858 | $4,458 |
| 7 | $4,200 | $1,200 | $5,400 |
| 8 | $4,800 | $1,610 | $6,410 |
| 9 | $5,400 | $2,093 | $7,493 |
| 10 | $6,000 | $2,654 | $8,654 |
| 11 | $6,600 | $3,299 | $9,899 |
| 12 | $7,200 | $4,035 | $11,235 |
| 13 | $7,800 | $4,867 | $12,667 |
| 14 | $8,400 | $5,802 | $14,202 |
| 15 | $9,000 | $6,848 | $15,848 |
| 16 | $9,600 | $8,013 | $17,613 |
| 17 | $10,200 | $9,306 | $19,506 |
| 18 | $10,800 | $10,736 | $21,536 |
| 19 | $11,400 | $12,313 | $23,713 |
| 20 | $12,000 | $14,046 | $26,046 |
| 21 | $12,600 | $15,949 | $28,549 |
| 22 | $13,200 | $18,032 | $31,232 |
| 23 | $13,800 | $20,310 | $34,110 |
| 24 | $14,400 | $22,795 | $37,195 |
| 25 | $15,000 | $25,504 | $40,504 |
| 26 | $15,600 | $28,451 | $44,051 |
| 27 | $16,200 | $31,655 | $47,855 |
| 28 | $16,800 | $35,134 | $51,934 |
| 29 | $17,400 | $38,908 | $56,308 |
| 30 | $18,000 | $42,999 | $60,999 |
| 31 | $18,600 | $47,428 | $66,028 |
| 32 | $19,200 | $52,221 | $71,421 |
| 33 | $19,800 | $57,403 | $77,203 |
| 34 | $20,400 | $63,004 | $83,404 |
| 35 | $21,000 | $69,053 | $90,053 |
| 36 | $21,600 | $75,582 | $97,182 |
| 37 | $22,200 | $82,627 | $104,827 |
| 38 | $22,800 | $90,225 | $113,025 |
| 39 | $23,400 | $98,415 | $121,815 |
| 40 | $24,000 | $107,241 | $131,241 |
Educational calculator, not financial advice. Results are hypothetical estimates based on the numbers you enter.
Activity · pairs · 10 min
Where Should the Money Live?
- Give pairs eight goal cards: prom in 4 months, a used car in 1 year, an emergency fund, college in 6 years, retirement in 45 years, a laptop in 6 months, a house down payment in 10 years, holiday gifts in 2 months.
- Pairs sort each goal into Savings or Investing and write the time horizon on the card.
- Pairs put the cards on a class timeline. Look for the pattern: where does the line between savings and investing fall?
Check for understanding · 1 of 3
You'll need $1,500 for a laptop in 6 months.
Where does that money most sensibly belong?
- AInvested in stocks, so it can grow faster
- BA savings account
- CSplit between three trending stocks
- DIn a friend's new business
B. A savings account
Short-term money needs to be there when you need it. Investments can drop right before you need to sell.
Check for understanding · 2 of 3
Investing can lose money, even when you pick well-known investments.
- True
- False
True
All investments carry risk. Even broad, well-known investments can fall in value, sometimes for long stretches.
Check for understanding · 3 of 3
What's the core tradeoff between saving and investing?
- ASaving is always better.
- BInvesting is guaranteed to earn more.
- CInvesting offers the chance of higher long-term growth in exchange for more risk.
- DThere's no difference.
C. Investing offers the chance of higher long-term growth in exchange for more risk.
Higher potential returns come with higher risk. That's why time horizon matters so much.
Remember
Key takeaways
- Saving = safe and slow. Investing = more growth potential, more risk.
- Only invest money you won't need for several years.
- Returns are never guaranteed.
- Under 18? Custodial accounts are opened by a parent or guardian.
Discuss
Talk it over
- Why do you think many people never start investing?
- What's one goal in your life that's short-term, and one that's long-term?
Exit ticket
Give one reason investing can grow money more than saving, and one risk.
Answer on your exit ticket before you leave.
Nice work today.
Review this lesson anytime — free, no account needed:
learnwithflc.org/courses/investing/what-investing-is
Next up: finish your worksheet.