Investing and Compound Interest

Time: Two 45-minute class periods (or one 90-minute block)

Essential Question: How will investing early in life affect your financial security in the future?

Overview: Students play two investing games, Slice of the Market and Investor Tower.

Introduction: In Investor Tower, students play as a young professional climbing the ranks (and literally climbing up) a corporate office building. The game is divided into two key areas: “platforming” and “investing”. Platforming involves Super Mario-style gameplay where players run, jump, collect coins, and accomplish job tasks on their way up the tower. Each pay period, they receive income through paychecks and bonus income based on how many coins they collected. They are then encouraged by an in-game character – their uncle – to allocate their earnings across various investment instruments: a high-yield savings account, CDs, bonds, stock funds, gold, and a real estate investment trust (REIT).

Students who don’t invest their funds or ignore the investing system entirely will have significantly lower net worth by the end of the game. The game will grade students from F to A depending on their earnings. The game has been tuned such that students must engage with investing in some way to reach C or higher. 
The key learning outcome for Investor Tower is an intuitive understanding of the power of compound interest; how relying solely on salary or wages means leaving money on the table. 
Slice of the Market is a portfolio management game where investing is a satisfying in-game action: slicing. Diversification of your portfolio involves slicing, then dragging and dropping funds to wherever students want. High yield savings accounts, stocks, and bonds look like graphs come to life; graphs that students can interact with viscerally. Compound interest is visualized clearly. Money that grows… literally grows.
Slice of the Market aims to teach students the power of compound interest, time in the market, and diversification. It also aims to demystify the idea of investing, and show that it may actually be quite fun.

Objectives: 

The student will…

Identify common types of financial assets, including stocks, bonds, mutual funds, and CDs
Explain how compounding interest benefits investors who start early and invest consistently
Compare the risk and expected return of different investment types
Discuss the tradeoffs between investing in a diversified fund versus individual stocks
Understand intuitively that uninvested cash – whether it’s in a piggy bank under your bed or sitting in a checking account – will not grow

Standards: Jump$tart Coalition National Standards for Personal Financial Education (2021)

Investing:
8-2: Common types of financial assets include CDs, stocks, bonds, mutual funds, and real estate
8-5: Instead of buying individual stocks and bonds, investors can buy shares of pooled investments such as mutual funds and ETFs
8-6: Different types of investments expose investors to different degrees of risk
8-7: The benefits of compounding for building wealth are greatest for people who invest regularly over longer periods of time
12-1: A person's investment risk tolerance depends on factors such as personality, financial resources, investment experiences, and life circumstances
12-3: Investors expect to earn higher rates of return when they invest in riskier assets
12-6: When making diversification and asset allocation decisions, investors consider their risk tolerance, goals, and investing time horizon

Suggested Pacing:
Day 1 - Investor Tower (45 min) Open with the Essential Question as a brief class discussion (5 min). Students play Investor Tower independently or in pairs (25–30 min). At the end of the 45-minute session, ask the students to show their final portfolio. Discuss the differences in investment choices and the effects on the final net worth. (5-10 min)
Day 2 - Slice of the Market (45 min) Brief recap: What investment types from Day 1 do students remember? (5 min). Students play Slice of the Market (20–25 min). After students finish the game, ask them to stay on the final screen. Ask 2-5 students to show their portfolios and talk about their investment choices (10-15 min)