This Chicago school teaches kids to invest by giving first graders a portfolio worth $20,000

Courtesy Ariel Investments

Half of Americans struggle to understand basic financial concepts, according to a 2019 financial literacy survey. Ariel Community Academy, a K-8 public school in Chicago's South Side with 500 students, is trying to change that.

ACA invests in its students by teaching them to invest

At Ariel Community Academy, financial education is approached like other core areas, such as math or English. Starting in first grade, students are taught four key concepts through the Ariel Education Initiative: personal finance, economics, entrepreneurship, and investing.

Every first grade class, typically 20-25 students, also receives an investment portfolio worth $20,000. While the school manages the portfolio at first, students take over, and can trade stocks and other investments, usually by sixth grade.

Courtesy Ariel Investments

When a class graduates, the portfolio is liquidated and $20,000 is recycled to the newest batch of first graders, allowing the program to fund itself in perpetuity.

In a 2017 interview with The Undefeated, Ariel's principal, Lennette A. Coleman, said that the average portfolio's profit is between $12,000 and $13,000. After the students graduate, their profits are divided up: The school keeps half and half goes to the students, who can either take a cash disbursement or start a 529 savings account for college.

How the school started

The Ariel program dates back to 1991, when Chicago-based investment management firm Ariel Investments sponsored 40 sixth graders as a part of a pilot program at what was then Shakespeare Elementary. The program gave the students investment portfolios and taught them basic financial education.

Though the program seemed promising, Shakespeare Elementary was shut down in 1992. In 1996, it was reopened as Ariel Community Academy by John Rogers, the Ariel Investments CEO, and Arne Duncan, the future secretary of education under President Obama.

Courtesy Ariel Investments

Rogers and Duncan set a goal of teaching kids financial basics during their elementary years. "In order to maximize the benefits of financial education, they believed that they needed to start with students earlier than sixth grade," says Auyana Orr, the community affairs manager at Ariel Investments.

Ariel is betting on the kids of Chicago

Ariel's students come largely from marginalized communities: Ninety percent of the students are African American, and 85% receive free or reduced-fee school lunches.

Ariel's administrators see the school as a way to help bridge the wealth gap, especially in Chicago's South Side, and to expand students' opportunities. "We are hoping that their experiences learning financial concepts will encourage students to consider higher-paying professional careers in the financial services industry," Orr says, adding that former students have gone on to careers as entrepreneurs, doctors, and lawyers.

Sometimes, finance is "not discussed in the homes of people of color," says former Ariel student and entrepreneur Myles Gage, who graduated in 2008. But, Gage says, "being 14 and understanding market cycles" has helped him build a career in the tech industry.

"I don't know if that would've been the case if I had attended a different school," he says.

Gage went on to found Rapunzl, which simulates stock portfolios to help users learn about the stock market, which he hopes will help others start investing.

Courtesy Ariel Investments

His experience at Ariel, Gage says, inspired him to "want to go make a difference in society, especially as it pertains to helping people of color or people from under-served areas get into the financial markets. It's been pretty exclusive, but everybody can participate."

Orr says that Ariel's administrators are proud that students end up with a more sophisticated understanding of the world around them. "The fact that an average kid can come talk to me about opportunity costs?" Orr says. "That's success to us."

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Correction: Average per class profit for Ariel Community Academy is between $12,000 and $13,000. An earlier version mischaracterized the figure.