A study conducted by Money magazine in August 2006 found that students aren't as financially literate as they ought to be. The test scores of students enrolled in a personal finance class were not significantly different from students who did not take the class. Teachers are now being challenged to find alternative strategies to educate students in the ways of personal finance. One component of personal finance that is particularly challenging is investments. The student investment club provides a path from in-class learning theories to active learning with "real world" consequences.
The stock market simulation program has been used extensively within the business curriculum at high schools across the country. Research suggests that while it has provided a basic introduction to concepts related to the stock market, it lacks the rigor and risk factors which can foster tree learning. Student investment clubs provide the rigor and risk to foster learning opportunities from financial literacy to preparing students to compete in today's global economy. These learning opportunities take place through actual investments within the stock market. While setting up an investment club for students might first appear to be an overwhelming task, once an instructor has established a few basic guidelines and a structure that is compatible with her particular style of teaching, it is much easier than it looks. Getting written permission from the parents and/or guardians and a tax I.D. # are the first order of business. Once the instructor has obtained parental consent and the appropriate tax documentation, he is ready to begin.
According to a report in 2006, the first step when initiating a student investment club is to establish a set of rules and procedures. Developing a constitution is one of the most effective and efficient ways to establish these guidelines. It is also a great learning opportunity to further students' understanding of the democratic process. Students will have the responsibility of constructing a document that provides for a fair and equitable distribution of duties, as well as deciding upon a decision-making process tailored to the particular culture of the student population. Students will also have the opportunity to elect officers and learn parliamentary procedure.
The next step involves yet another learning strategy to enhance students' critical thinking skills, and increase their financial literacy within the banking industry. Since the club will need to open a bank account, it will be important for students to conduct research on the various types of banking institutions. This research will enable the students to critically analyze their options before making a final decision. Once the club has completed these steps, the next topic of discussion will be to determine how the club is funded. Research has shown that two of the most popular avenues to pursue for funding are member dues and fundraisers. Several clubs charge a membership fee along with monthly dues to raise the needed dollars to invest, while other clubs have initiated fundraising activities to fill their treasury. While both methods accomplish a club's ultimate goal, fundraising is another way to incorporate critical thinking and problem-solving skills; students have the opportunity to develop a comprehensive campaign strategy enabling them to accomplish this goal. …