COURSE SECTION AT A GLANCE
10 Videos | 44 Minutes and 40 Seconds
Recommended Session: 75–90 Minutes
Recommended Prerequisite: Chapter 6—Step 2: Budgeting and Saving the Money
CORE SUBJECTS
Investing • Reinvesting • Earning Interest • Paying Interest • Return on Investment • Simple Interest • Compound Interest • Compounding • Assets • Income-Producing Assets • Financial Freedom • Consistency • Patience • Applied Knowledge • Lifelong Financial Learning
SUPPORTING RESOURCES
• Financial Literacy From Scratch YouTube Course
• Financial Literacy From Scratch Workbook
• SeeYourDollar.com Keys to Wealth Page
• SeeYourDollar.com Numbers Page
LESSON PURPOSE
Chapter 6 establishes that positive cash flow creates the opportunity to save and accumulate money. It also explains that saving alone does not automatically create financial freedom when financial progress remains completely dependent upon continued physical work, time, and effort.
Chapter 7 introduces Step 3 of the financial-growth process: investing or reinvesting money and beginning the process of making that money work for the learner.
Learners examine interest, return on investment, simple growth, compound growth, assets, and the relationship between productive assets and financial freedom.
The chapter introduces different investment vehicles and asset categories to increase awareness and encourage continued financial education. Its purpose is not to help learners master every type of investment immediately or suggest that investment returns are guaranteed.
The goal is to help learners understand why investing exists, how compounding works, why time and consistency matter, and how saved money may be positioned inside productive assets that have the potential to generate additional income.
LEARNING OBJECTIVES
By the end of this chapter, learners should be able to:
• Explain the difference between saving money and investing money.
• Distinguish between earning interest and paying interest.
• Calculate a basic percentage return on an investment.
• Explain how the amount invested and the rate of return affect potential profit.
• Distinguish between simple interest and compound interest.
• Explain how reinvested earnings contribute to compound growth.
• Describe how time affects a compounding example.
• Explain why investment projections are not guarantees.
• Describe the relationship between positive cash flow, saving, and investing.
• Define an income-producing asset within the course framework.
• Identify examples of potential income-producing assets and investment vehicles.
• Explain how assets can increase the income side of cash flow.
• Describe financial freedom as reducing dependence upon continued physical labor through income-producing assets.
• Explain why financial education should continue throughout a person’s investing journey.
• Recognize that a person can begin learning and investing with smaller amounts of money.
• Use the SeeYourDollar.com Keys to Wealth Page and Numbers Page to create and compare hypothetical investment examples.
THE SITTING WITH WISDOM METHOD
LISTEN: Give the lessons your full attention and receive the information being presented.
Learners may watch the complete chapter or selected videos based on the subject being taught. Encourage them to listen for:
• The difference between earning interest and paying interest.
• How the size of an investment can affect the size of a potential return.
• How simple interest differs from compound interest.
• How reinvesting earnings changes the amount that may earn a future return.
• Why time and consistency matter within compounding examples.
• The difference between working for money and positioning money to work for you.
• How income-producing assets connect to cash flow.
• Why applied knowledge is necessary during the investing process.
• Why starting small can still begin an important long-term process.
DISCUSS: Begin the conversation with three questions:
In your own words, what did you understand from the information discussed in the lesson?
What stood out to you most, and what did you think about it?
If the lesson connects to a SeeYourDollar.com tool, can you use a real-life situation or an example of your own to demonstrate how the concept works?
Additional conversation starters may include:
• What is the difference between saving money and investing money?
• What does it mean to earn interest?
• What does it mean to pay interest?
• Why can the same percentage produce different dollar returns on investments of different sizes?
• What happens when investment earnings are reinvested?
• Why does compound growth generally become more noticeable over longer periods?
• How can starting earlier affect a long-term compounding example?
• Why should a projected investment return never be treated as guaranteed?
• What factors could cause an actual investment result to differ from a calculator projection?
• What is an income-producing asset?
• How can an asset affect the income side of someone’s cash flow?
• Why can someone earn a large income and still remain financially dependent upon continued work?
• What does the course mean when it compares an asset to an ATM machine?
• Why must investors continue educating themselves?
• Why should smaller amounts of money still be respected?
• How can consistency matter more than waiting until someone has a large amount of money?
APPLY: Use the SeeYourDollar.com Keys to Wealth Page and Numbers Page to examine hypothetical investment examples.
ACTIVITY 1: UNDERSTANDING PERCENTAGE RETURNS
Present the following examples:
10% of $100 = $10
10% of $1,000 = $100
10% of $10,000 = $1,000
Ask learners:
• What remained the same in all three examples?
• What changed?
• Why did the dollar amount of the potential return increase?
Then hold the investment amount constant and change the percentage:
10% of $10,000 = $1,000
15% of $10,000 = $1,500
20% of $10,000 = $2,000
Ask learners to identify the two major variables affecting the potential dollar return:
• The amount invested
• The percentage earned
Explain that actual investing involves additional considerations, including risk, market performance, time, fees, taxes, and the possibility of loss.
ACTIVITY 2: SIMPLE INTEREST VERSUS COMPOUND INTEREST
Use the appropriate calculator on the SeeYourDollar.com Numbers Page.
Enter the following hypothetical example:
Starting Amount: $1,000
Annual Rate: 8%
Time: 20 Years
Additional Contributions: $0
Under a simplified simple-interest calculation:
$1,000 × 8% = $80 per year
$80 × 20 years = $1,600 in interest
Estimated Total:
$1,000 + $1,600 = $2,600
Under an annual compound-growth calculation, the ending value would be approximately $4,661.
Ask learners:
• Why did the compound example produce a larger result?
• What happened to the earnings from each previous year?
• In the compound example, was the 8 percent repeatedly calculated only on the original $1,000?
• How did time affect the difference between the two examples?
Explain that the calculator demonstrates mathematical potential based upon the assumptions entered. It does not promise that an actual investment will earn 8 percent every year.
ACTIVITY 3: BUILD A HYPOTHETICAL INVESTMENT PROJECTION
Use the SeeYourDollar.com Keys to Wealth Page.
Enter:
• A starting investment amount.
• A monthly contribution.
• A hypothetical annual rate of return.
• A period of time.
Have learners identify:
• The total amount contributed from their own money.
• The projected ending value.
• The projected return on investment.
• The difference between the amount contributed and the projected ending value.
Then change one variable at a time:
• Increase or decrease the starting amount.
• Increase or decrease the monthly contribution.
• Change the hypothetical rate.
• Change the number of years.
Ask learners:
• Which variable created the largest difference?
• What happened when the investment was given more time?
• What happened when the monthly contribution increased?
• Why might a higher expected return also involve greater uncertainty or risk?
• Why should someone research an actual investment rather than relying only on a calculator?
ACTIVITY 4: THE INCOME-PRODUCING ASSET TEST
Within the course’s practical framework, ask learners to examine a purchase or investment by answering:
“Does this have the potential to place money back into my hands or increase the income side of my cash flow?”
Provide several examples for discussion:
• A rental property
• A stock that may increase in value or distribute dividends
• A bond or note that may pay interest
• A business
• Intellectual property that may produce royalties
• Equipment used to provide a profitable service
• Jewelry purchased for personal use
• A personal vehicle that does not produce income
• A vehicle used within an income-producing business
Ask learners to explain why the same type of property may function differently depending upon how it is used.
The purpose of the activities is to help learners understand the mathematical relationships behind investing, not to recommend any specific investment or guarantee a financial result.
CHECKING FOR UNDERSTANDING
A learner demonstrates basic comprehension when they can:
• Explain the difference between saving and investing.
• Distinguish between earning interest and paying interest.
• Calculate a basic percentage return.
• Explain why the same percentage can produce different dollar returns.
• Distinguish between simple interest and compound interest.
• Explain how reinvesting earnings contributes to compounding.
• Describe how time and consistency affect hypothetical investment growth.
• Explain why a calculator projection is not a guaranteed result.
• Define an income-producing asset within the course framework.
• Identify at least three examples of potential income-producing assets.
• Explain how assets can affect the income side of cash flow.
• Describe the relationship between assets and financial freedom.
• Create and explain a hypothetical example using a SeeYourDollar.com tool.
FACILITATOR NOTES
• All investment calculations should be clearly identified as hypothetical educational examples.
• A fixed annual return entered into a calculator does not mean an actual investment will produce that return every year.
• Actual investment results may be affected by gains, losses, market volatility, fees, taxes, inflation, timing, and other factors.
• Higher potential returns commonly involve increased risk. Avoid encouraging learners to pursue an investment based solely upon the highest projected percentage.
• The course introduces investment vehicles for awareness and continued study. Mentioning stocks, mutual funds, retirement accounts, real estate, bonds, notes, royalties, insurance products, cryptocurrency, or other vehicles does not represent an endorsement or recommendation.
• Formal accounting and legal definitions of an asset may be broader than the course’s practical income-producing framework. Within this chapter, the focus is primarily on assets that can potentially generate income or support financial growth.
• Not every item with monetary value produces cash flow. The way something is purchased, financed, owned, and used can affect its financial role.
• Learners should be encouraged to research investments, understand risks, ask questions, and seek qualified guidance when necessary.
• Avoid asking learners to reveal private investment balances, household income, or other sensitive financial information.
• Reinforce that smaller contributions can still help someone begin developing investing knowledge and habits.
• Use the workbook when additional questions, calculations, or independent learning support are needed.
FLEXIBLE DELIVERY OPTIONS
LEARNING REP — 10–15 MINUTES
Watch one short lesson, ask the first two discussion questions, and complete one basic percentage-return or asset-identification example.
GUIDED LESSON — APPROXIMATELY 35–45 MINUTES
Watch selected lessons, compare simple and compound interest, and use one SeeYourDollar.com tool to create a hypothetical investment projection.
COMPLETE SESSION — 75–90 MINUTES
Watch the complete chapter, discuss investing, compounding, assets, and financial freedom, answer the workbook questions, and complete the investment projection and asset-identification activities.
This chapter may also be divided into two sessions:
SESSION ONE
• Earning Interest Versus Paying Interest
• Percentage Returns
• Simple Interest
• Compound Interest
• Reinvesting Earnings
• The Effect of Time and Consistency
SESSION TWO
• Saving Versus Investing
• Income-Producing Assets
• Investment Vehicles
• Financial Freedom
• Lifelong Financial Learning
• Starting With Smaller Amounts
CONNECTION TO THE PREVIOUS CHAPTER
Chapter 6 establishes that positive cash flow creates the opportunity to save and accumulate money, while also explaining that saving alone does not automatically create financial freedom.
Chapter 7 shows how a portion of saved money may be invested or reinvested into productive assets and given the opportunity to generate additional money over time.
CONNECTION TO THE NEXT CHAPTER
Chapter 7 introduces investing, compound growth, income-producing assets, and financial freedom.
Chapter 8—Bring It Home and Make It Make Sense—serves as a checkpoint by bringing the making, saving, and investing process together and reinforcing how cash-flow direction determines whether someone is financially running in place, moving toward depletion, or moving toward accumulation.
