Lesson #4: Invest and Build Wealth

If you could have $100 right now or $150 in a year, which would you choose and why? Discuss the factors considered in making the decision (e.g. current versus future wants and needs).

Can you think of any money management strategies that involve waiting to spend money in order to grow the initial amount?
Saving and investing can earn money because of potential benefits such as interest and rate of return.

Interest is a percentage of money earned on top of money invested, paid as an incentive to save your money. Interest is also the percentage we pay on top of the amount borrowed when we take out loans. For example, banks offer interest as an incentive because they want to use your money to provide loans to others.
Rate of return is the amount gained or lost on an investment over time, expressed as a percentage of the initial amount invested, or the principal.

3. When determining how to manage money, it’s important to consider the risks and rewards involved.
   For example, savings options such as Certificates of Deposit (CDs) offer guaranteed interest rates, making them low-risk; but it can often take a long time for money to grow because the interest rates are lower than other options.
   Also, while investing options such as stocks offer higher rates of return, they can be variable, meaning they change over time and can be more of a risk.
4. Review the investment strategies below. Discuss the differences between the investments by distinguishing the pros, cons, and risks of each. All investment options come with some amount of risk. Historically, greater risks have received greater rewards but have also experienced greater losses.

5. Different investing strategies offer different types of interest or returns: simple or compound. Some investment options have guaranteed interest rates, while others have variable rates that fluctuate.