Ages 10+ · Money · Investing and growing
Risk and reward
Steady Garden • Adds 10 coins every year • Never dips • Stays between 100 and 140 Swing Garden • Some years adds lots • Other years gives some back • Runs from 70 up to 180 Two made-up gardens in Pebble Hill. The big idea A bigger possible reward usually comes with a bigger chance of ending with less.
How it works Reward is the extra a garden adds. Risk is the chance of ending with less.
The Swing Garden has more of both, and the Steady Garden has less. A bigger possible reward usually comes with a bigger risk.
No one can know which way a swing garden will go next. The same garden can end ahead one time and behind another.
Cy's Swing Garden 0 50 100 150 200 160 Year 1 110 Year 2 180 Year 3 150 Year 4 coins Cy's Swing Garden, year by year. Ana's Swing Garden 0 50 100 150 70 Year 1 130 Year 2 90 Year 3 120 Year 4 coins Ana's Swing Garden, in the very same garden. Example 1: The Steady Garden It adds 10 coins every year, never more or less. 100 + 4 × 10 = 140 After four years it holds 140 coins. Example 2: Cy's swing years Cy's garden goes 160, 110, 180, then 150. Year 2: 160 − 110 = 50 coins given back. Year 3: 180 − 110 = 70 coins added. After four years Cy has 150, more than Maya's 140. Example 3: Ana's swing years Year 1: it shrinks to 70, which is 100 − 70 = 30 coins below what she planted. Years 2 to 4 go 130, 90, then 120. Steady would have made 140, and 140 − 120 = 20. Ana ends 20 coins below Steady. Example 4: Reward and risk Reward is the extra a garden adds. Risk is the chance of ending with less. Swing ran from 70 up to 180, while Steady stayed between 100 and 140. More possible reward, and more possible risk. Words to know reward The extra a garden adds. risk The chance of ending with less. steady Adds the same every year. swing Some years adds lots, some years gives back. Watch out The same garden can end ahead one time and behind another. Only the years differ. A bigger possible reward usually brings a bigger risk. No one can know which way a swing garden will go next. Even grown-ups cannot see the future, which is why grown-ups ask about risk before they choose real things. Try it The Steady Garden adds 10 coins a year. How many coins after 4 years from 100? The Swing Garden falls from 160 to 110. How many coins does it give back? Is shrinking to 70 a reward or a risk? Which garden has the bigger possible reward, Steady or Swing? Answers: 1. 140 coins · 2. 50 coins · 3. A risk · 4. Swing
Try at home Ask a grown-up about a time they chose safer or riskier, like a trip. What did they think about first?
For grown-ups Ask a grown-up about a time they chose a safer or a riskier way, like a trip, and what they thought about first. The gardens are made up and the story gives no advice about any real money.