Minecraft
Preparation
Lesson Narrative
In this project-based lesson, students synthesize their knowledge of equities, fixed income, and alternative assets to construct a diversified investment portfolio. They will participate in a risk tolerance simulation, using mathematical modeling (scatterplots and correlation coefficients) to analyze how different asset classes react to market shocks. By the end of the lesson, students will present a data-driven investment strategy tailored to a specific life stage.
Learning Goals
• Construct a diversified portfolio balancing equities, fixed income, and alternative assets.
• Use mathematical modeling (scatterplots) to visualize risk and return correlation.
• Evaluate personal risk tolerance based on time horizons and financial goals.
Student Facing Learning Goals
• Let's build a real investment portfolio and test if it survives a stock market crash.
Student Facing Learning Targets
• I can build a diversified portfolio.
• I can read a scatterplot to understand risk vs. reward.
• I can adjust my investments based on how close I am to retirement.
Required Academic Standards
National Jump$tart Standards:
• Saving and Investing (Standard 2): Implement a diversified investment strategy that is compatible with personal financial goals.
Glossary Entries
Portfolio: A collection of financial investments like stocks, bonds, commodities, and cash equivalents.
Risk Tolerance: The degree of variability in investment returns that an investor is willing to withstand.
Correlation Coefficient: A mathematical measure of how closely two assets move together (e.g., if stocks crash, do bonds crash too?).
Scatterplot: A graph in which the values of two variables are plotted along two axes, showing the correlation between them.
Lesson
Warm Up
3.13.1: The All-In Bet
Launch: Have students stand in randomized groups of 3 at vertical whiteboards. Present the prompt verbally or project it. Give them 4 minutes.
Synthesis: Select two groups to share. Establish the baseline: Putting all your eggs in one basket is gambling, not investing. Diversification is the only "free lunch" in finance.
Student Facing Task
You have $10,000 to invest. You can put it all into one tech company that might triple in value but has a 50% chance of going bankrupt, OR you can split it across 500 different companies that will slowly double over 10 years. Which do you choose and mathematically why?
Activity 1
3.13.2: Mapping the Risk (Scatterplots)
Launch: Keep students at whiteboards. Project the asset scatterplot data. Give groups 8 minutes to graph.
Synthesis: Have the class observe the boards. (Teacher Key: X-axis is Risk, Y-axis is Return. Bonds are bottom-left, Stocks top-right, Crypto extreme top-right). Explain the direct correlation: you cannot get high returns without taking high risk.
Student Facing Task
Look at the data table provided for three assets: Asset A (Treasury Bonds), Asset B (S&P 500 Index), Asset C (Cryptocurrency).
1. Draw a scatterplot graph with "Risk" on the X-axis (1-10) and "Expected Return %" on the Y-axis.
2. Plot the three assets.
3. Draw a trendline. What is the mathematical relationship between risk and reward?
Activity 2
3.13.3: Portfolio Construction
Launch: Present the client profiles. Give the whiteboard groups 10 minutes to allocate the portfolios.
Synthesis: Facilitate a class debate. (Key: The 60-year-old needs 70% bonds/30% stocks to protect their wealth. The 20-year-old needs 90% stocks/10% bonds for maximum growth). Discuss "Time Horizon"—time is the ultimate risk mitigator.
Student Facing Task
You are a portfolio manager. You have two clients: Client A is a 20-year-old with 40 years until retirement. Client B is a 60-year-old retiring in 5 years. Allocate their $100,000 across Stocks (High Risk/High Growth) and Bonds (Low Risk/Low Growth).
1. What percentage goes to stocks vs. bonds for Client A?
2. What percentage goes to stocks vs. bonds for Client B?
3. Justify your math based on their "Time Horizon."
Lesson Synthesis
Lesson Synthesis (5 min)
Narrative: Bring the class back to their seats. Review the student-facing learning targets. Summarize: "Investing isn't about eliminating risk; it is about mathematically managing risk so you don't lose your wealth right when you need it."
Cool Down
3.13.4: The Crash Test
Narrative: This exit ticket serves as a formative assessment on correlation and diversification.
Teacher Rubric: A successful response must articulate that because the assets are inversely correlated (or simply diversified), the bonds act as a parachute. The portfolio only loses a fraction of the value, preventing total financial ruin.
Student Facing Task
If you have a portfolio that is 100% tech stocks and the tech industry crashes by 50%, you lose half your money. If you have a diversified portfolio (50% tech stocks, 50% government bonds), what happens to your total wealth during that same tech crash, and why?