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Investing7.5 Investment StrategiesStudent Activity PacketNameActivityResponse1 Stock Investing Without Too Much RiskRead this article about millennials and their investment patterns. You only need to read through Tip #4. Approximate time: 10 minsWhy do you think millennials may not be investing at the higher rates of older generations?Which of the first 4 tips do you feel prepared to do (once you have steady income)? Which, if any, are still confusing to you?2The Power of DiversificationNow, watch this video which describes how to diversify on two different levels. Approximate time: 8 minsWhat is meant by “asset allocation?” Once you’ve done asset allocation, what’s the next level of diversification you should do among each asset class? How does diversification protect investors? 3Vanguard Portfolio Allocation ModelsThis resource page from Vanguard, an investment management company, shows 9 base models of asset allocations and how they’ve performed, on average, since 1926. Answer the questions to the right based on the data. Approximate time: 7 mins These allocation models are divided into 3 classes -- income, balanced, and growth. Which of the three is riskiest? How do you know?Why do you think the data includes the number of years with a loss for each asset allocation model? Why might an investor care about that number?What is the relationship between risk and average annual return? 4Why Young People Shouldn’t Hesitate to InvestJust as compound interest on a savings account is most valuable over a long time period, investing as early as possible in life is your best option for a comfortable retirement. Read this article on investing in your 20s. How does the advice in this article compare with what you’ve learned throughout the investing unit? What are the key takeaways?Approximate time: 10 mins 5Jean Chatzky: Bad month for the market?Skim through this article, in which Jean Chatzky shares several pieces of advice on investing. Then answer the following questions.Approximate time: 7 minsSummarize her number one piece of investing advice.Why might this be the perfect advice for beginning investors? What might be one challenge to following Jean’s advice? 6The Psychology of InvestingNow, watch this video, which describes some of the psychological factors that impact investor’s decision making. Approximate time: 5 mins What does Ackman mean when he says you must avoid “following the herd?” How does human emotion impact investors’ decision making?What’s one of Ackman’s strategies for preventing emotional mistakes?11-12Entrusting Portfolios to Robo Advisors ANDCan Robo Advisors Win Control?Robo advising, a new all-electronic alternative to a stock broker, addresses many of the concerns mentioned in the previous resources.Watch these two videos and then answer the questions at right.Approximate time: 10 mins What are at least 3 advantages to using a robo advisor over a traditional financial advisor? Which types of investors might be interested in using a robo advisor? Who might not be interested?Why do the two different videos have such varying opinions on the usefulness of robo advisors? What’s your impression of robo advisors? ................
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