The Risk Ladder

What your kid learns

• The rungs

  From bottom to top. Insured savings: safe and slow. Bonds: loans to governments or companies that pay interest. Stocks: bigger swings. Hype bets: can go to zero.

• “Usually” isn’t “guaranteed”

  Higher rungs can earn more over long stretches. They can also lose money. “Usually” never means “guaranteed.”

• Match the rung to the time

  Money you need soon stays low on the ladder. Money for many years from now can climb, if you can live with drops.

• Risk tolerance

  Risk tolerance is how much up and down you can handle without panicking. Everyone’s is different, and that’s OK.

The story: Climbing the ladder

Ravi and Jade picture a risk ladder, from insured savings up to hype bets.

1. Helper: Picture a ladder. Each rung up can earn more, and can drop more.
2. Helper: Bottom rung: insured savings, safe and slow. Next up: bonds, which are loans that pay interest.
3. Helper: Higher up: stocks, with bigger swings. The top rung: hype bets, which can go to zero.
4. Ravi: My $40 is for a game next month. Which rung?
5. Jade: The bottom rung. You need it soon, so keep it safe.
6. Ravi: And money for something 15 years away?
7. Jade: That could climb higher, if you can handle drops along the way.
8. Helper: Need it soon? Keep it safe. These are pretend examples, not advice.

The game: Pick a rung

Put each pretend goal where it fits on the ladder. Pretend examples, not advice.

Games use pretend money and work with taps or a keyboard. Nothing is timed.

New words

risk

the chance of losing money

return

what your money earns or loses

bond

a loan to a government or company that pays interest

risk tolerance

how much up and down you can handle without panicking

Questions at the end

• Which list goes from lowest risk to highest?
• What is a bond?
• You need money in 2 weeks. Which rung fits?
• Which rung is the worst fit for money you need next month?
• Which rung is insured?

Remember this

Need it soon? Keep it safe.

Talk about it

How do you feel when something you own drops in value? What would help you stay calm?

Try it at home: Put your goals on a rung

1. List your goals, big or small.
2. Write when you’ll need each one.
3. Put each goal on a rung of the ladder.

The whole mission works with no account or app.

School standards

• Grades 6–8
• National Standards for Personal Financial Education: Investing