Everybody should know about interest rates, inflation, share investment portfolios — nobody teaches this,” says Bernhard Gademann, president of the elite Swiss boarding school Institut auf dem Rosenberg. His students manage hypothetical $1 million portfolios and present their investment picks to a mock board.
In one of the most popular classes, which covers wealth creation and finance, students learn about various asset classes, risk versus reward, and the power of compounding. They also discuss philanthropy, family businesses, and succession management.
Classroom discussions cover topics like interest rates, inflation, share investment portfolios, and how they are interconnected with daily life. Students learn to manage hypothetical $1 million portfolios and present their investment picks to a mock board of a family office.
Research shows taking a financial education class in high school pays off. In fact, there is a lifetime benefit of roughly $100,000 per student from completing a one-semester course in personal finance.
Teachers and schools prioritize lessons on investing because they have the highest engagement among students. However, budgeting, banking, paying for college, taxes, credit management, and the psychology of money are equally important.
Many studies show there is a strong connection between financial literacy and financial well-being. Students who take personal finance courses starting from a young age are more likely to tap lower-cost loans and grants when it comes to paying for college and less likely to rely on private loans or high-interest credit cards.
Further, students with a financial literacy course under their belt have better average credit scores and lower debt delinquency rates as young adults. In addition, teenage financial literacy is positively correlated with asset accumulation and net worth by age 25.
Among adults, those with greater financial literacy find it easier to make ends meet in a typical month, are more likely to make loan payments in full and on time, and less likely to be constrained by debt or be considered financially fragile. They are also more likely to save and plan for retirement.
Source: https://www.cnbc.com/2024/07/24/1-million-hypothetical-portfolios-how-rich-kids-learn-about-money.html