INVESTING FUNDAMENTALS

Building wealth requires understanding the basic vehicles and principles of investing. These topics lay
the groundwork for informed investment decisions.

TOPIC 84
Introduction to the Stock Market
A foundational overview of how the stock market operates and what it means to own shares of a company.
Students learn the mechanics of exchanges, price discovery, and the difference between growth and income
stocks.

What is a stock and what does ownership mean
How stock exchanges work (NYSE, NASDAQ)
Bull markets vs. bear markets
How stock prices are determined
Reading a basic stock quote
Common stock vs. preferred stock
Dividends and dividend-paying stocks

TOPIC 85
Bonds and Fixed-Income Investing
An exploration of bonds as a fixed-income investment vehicle, covering how they generate predictable income and
serve as a stabilizing force in a diversified portfolio. Emphasis is placed on the critical relationship between interest
rate movements and bond valuations.

What is a bond and how it works
Government bonds, municipal bonds, and corporate bonds
Bond ratings and credit risk
Interest rates and their inverse relationship to bond prices
Yield to maturity explained
Bond laddering strategies
Role of bonds in a balanced portfolio

TOPIC 86
Mutual Funds: Pooled Investing for Everyone
Mutual funds allow individual investors to access diversified, professionally managed portfolios with a single
investment. This topic examines fund structure, costs, management styles, and how to evaluate funds for personal
financial goals.

How mutual funds pool investor capital
Active vs. passive fund management
Load vs. no-load funds
Understanding the fund prospectus
Net asset value (NAV) explained
Types of mutual funds (equity, bond, balanced, money market)
How to select a mutual fund
Tax implications of mutual fund distributions

TOPIC 87
Exchange-Traded Funds (ETFs) Explained
ETFs combine the diversification of mutual funds with the flexibility of stock trading, typically at lower cost. This
topic covers how ETFs work, their tax advantages, and how they can serve as the core building blocks of a modern
investment portfolio.

How ETFs differ from mutual funds
Intraday trading and liquidity advantages
Broad market ETFs vs. sector ETFs
ETF expense ratios and cost efficiency
Tax efficiency of ETFs vs. mutual funds
Leveraged and inverse ETFs (risks and cautions)
Building a simple ETF-based portfolio

TOPIC 88
Index Fund Investing: The Power of Passive Strategy
Index funds offer a low-cost, evidence-based approach to investing that consistently outperforms the majority of
actively managed funds over long time horizons. This topic presents the compelling case for passive investing as a
cornerstone retirement strategy for baby boomers.

What is a market index (S&P 500, Dow Jones, Russell 2000)
How index funds track market benchmarks
The case for passive vs. active investing
Historical performance of index funds vs. active managers
Low-cost investing and the impact of fees over time
Total market index funds vs. narrow indexes
John Bogle and the Vanguard philosophy

TOPIC 89
Asset Allocation: Building the Right Portfolio Mix
Asset allocation — the division of investments among different asset classes — is one of the most important
determinants of long-term portfolio performance and risk. This topic guides students through building an allocation
strategy aligned with their age, goals, and risk tolerance.

Understanding asset classes (stocks, bonds, cash, alternatives)
Age-based allocation strategies
Strategic vs. tactical asset allocation
The 60/40 portfolio and its modern evolution
Rebalancing: when and how to rebalance
Target-date funds as an allocation tool
Aligning asset allocation with retirement timeline

TOPIC 90
Diversification: Don’t Put All Your Eggs in One Basket
Diversification reduces portfolio risk by spreading investments across assets that do not move in perfect tandem.
This topic connects modern portfolio theory with timeless wisdom — including Scripture — to show why a
well-diversified portfolio is both financially prudent and spiritually aligned.

The principle of diversification and why it works
Correlation between assets and portfolio volatility
Diversification across asset classes
Geographic diversification (domestic vs. international)
Sector diversification within equities
Over-diversification pitfalls
Biblical wisdom on spreading risk (Ecclesiastes 11:2)

TOPIC 91
Understanding and Managing Investment Risk
Understanding risk is essential to building a portfolio you can hold through market turbulence without panic-selling
at the worst time. This topic helps students distinguish between their emotional tolerance for risk and their actual
financial capacity to absorb losses.

Types of investment risk (market, inflation, liquidity, credit)
Risk tolerance vs. risk capacity
Risk tolerance questionnaires and self-assessment
Standard deviation and volatility as risk measures
Risk-return tradeoff
Sequence of returns risk in retirement
How faith and stewardship shape risk tolerance

TOPIC 92
Dollar-Cost Averaging: Investing Through Market Cycles
Dollar-cost averaging is a disciplined strategy of investing fixed amounts at regular intervals, automatically buying
more shares when prices are low and fewer when prices are high. This approach removes emotion from investing
and builds wealth steadily — a strategy perfectly aligned with stewardship principles.

What is dollar-cost averaging (DCA)
DCA vs. lump-sum investing
How DCA reduces the impact of market volatility
Automating contributions through payroll deduction
DCA in 401(k) and IRA accounts
Psychological benefits of systematic investing
Long-term wealth building through consistency

TOPIC 93
Understanding Market Cycles
Markets move in cyclical patterns driven by economic forces, investor sentiment, and monetary policy — and
understanding these cycles helps investors avoid costly emotional decisions. This topic builds the mental
framework to endure downturns with confidence and perspective.

The four phases of a market cycle (expansion, peak, contraction, trough)
Economic indicators that signal market phases
Historical market cycles and recovery timelines
Bear market survival strategies
Why investors should not time the market
The danger of panic selling
Staying the course: a long-term perspective

TOPIC 94
Investment Fees and Costs: The Silent Return Killer
Investment fees may seem small in percentage terms, but compounded over decades they can consume hundreds
of thousands of dollars in retirement wealth. This topic equips investors to identify, compare, and minimize fees as
one of the highest-impact actions available to them.

Types of investment fees (expense ratios, advisory fees, trading commissions)
How fees compound negatively over time
Comparing fee structures across fund types
The fiduciary standard and fee transparency
Low-cost vs. high-cost fund comparison over 30 years
Questions to ask your financial advisor about fees
Fee benchmarks and what is reasonable

TOPIC 95
Faith-Based and ESG Investing
Faith-based and ESG investing allow believers to align their investment portfolios with their values, avoiding
industries that conflict with biblical principles while supporting companies that reflect responsible stewardship. This
topic bridges theology and finance to help believers invest with both conviction and competence.