• talk about types of investm ent
5
P B • talk about investm ent portfolios
ITT.6 Fit * a ^ out stock m arket
• talk about arrangem en ts and
appointm ents
Investing money
Speaking 1 Look at these photographs. They show different ways of investing. Do you
invest in any of these things? What other types of investments do you know?
Work in pairs and discuss.
Reading 2 Read this text. Underline four things that people buy as investments.
IN V E S T IN G YO U R M O N E Y
Investment means using money to buy something (an asset) with the aim of making
a profit by selling that asset at a higher price some time in the [Link] are
many different types of investments. Some people put their money in art, stamps,
or collectibles. Other people invest in shares and become part owners of a
company. Not only can they make a profit by selling those shares at a higher price
than they paid for them, but they can receive a dividend - a share of the profits
which the company gives to its shareholders every year. People often ask about
the difference between savings and investments. Sometimes the two terms appear
interchangeable, but there is a big difference. Quite simply, investment involves
some kind of capital [Link] is no guarantee that you will make a profit. In fact,
the price of your assets may fall and you may not even get back your capital, the
money you put in. Some banks call their savings accounts ‘investment accounts’,
but this is [Link] only risk of savings accounts is that inflation will reduce
the value of the money you put in [Link] is no risk of losing your capital.
3 Read the text in 2 again. Are these statements true (T) or false (F)?
1 There is no difference between savings and investments. (T / F )
2 Buying art and buying shares are both types of investments. (T / F )
3 Investments involve more risk than savings. (T / F )
4 There are two ways in which shareholders can make money from
their shares. (T / F )
5 Savings accounts involve no risk at all. (T / F )
36 5 Investm ent
4 Find and underline the words in the box in the text in 2. Match them to these
definitions 1-7.
asset capital collectibles dividend guarantee profit risk
1 certainty that something will happen:__________
2 the possibility that you will make a loss:_________
3 the money you pay for an asset or put into a savings account:--------
4 the money you make when you sell something for a higher price than you
paid for it:__________
5 a valuable item that can be sold for cash:--------
6 things that have value because many people are interested in owning them:
7 a share in the profits of a company, which is paid to the shareholders:
Listening 26Listen to a financial adviser. Which types of investment in the box
does he mention?
art bonds gold mutual funds property shares
Listen again. Match investments A, B and C to what the financial adviser says
about them.
A shares B bonds C mutual funds
1 There isn’t a predictable rate of return---------
2 There is little risk, but the returns are quite low.--------
3 You put your money together with money from other investors---------
4 There is no guarantee you can make a profit---------
5 You get your capital back on a certain date in the future---------
6 Your earnings change from day to day---------
Vocabulary Complete these sentences with the words and expressions in the box.
capital dividend fixed guarantee open-end
predictable profit rate of return risk
1 The interest rate is _________ at 2.5% for five years, which is quite low, so I
am looking for an investment with a b etter---------
2 No type of investment comes with a __________ that you will make a profit.
Sometimes you may make a loss.
3 New investors can join at any time because it is a n --------- fund.
4 This investment doesn’t have a fixed interest rate so the amount you earn is
n o t__________
5 He sold his art collection and made a __________ of £15,000.
6 With any investment, there is always a __________ that you won’t get back the
money you put in.
7 On the date when a bond matures, the company or government pays back
y o u r__________
There are only two 8 The company is doing well, so shareholders will get a good--------
guarantees in life: this year.
death and taxes!
Investm ent 37
Spreading the risk
Reading 1 Read this saying. What does it mean and how do you think it relates
to investment?
D o n ’t put a ll your eggs into one basket!
2 Read this article about investment portfolios from an investment website. What
is the main aim of a portfolio?
3 Read the article again. Complete these sentences with the words in the box.
assets chances financial goals management
risk spreading types
1 A portfolio combines different of investments.
2 The aim of a portfolio is to minimise---------
3 A bank may offer a portfolio__________ service to its customers.
4 Diversification is a way o f-------- risk.
5 Portfolio managers choose________ to include in the portfolio.
6 The of the customer affect the decisions that the portfolio
manager makes.
7 Investors all have different__________ needs.
8 T h e __________ of making a profit are improved if the investor’s portfolio
is diversified.
4 Are these statements true (T) or false (F) according to the article in 2?
1 A portfolio increases an investor’s chances of making a profit. (T / F)
2 Portfolios only include limited types of investments. (T / F)
3 All the investments in a portfolio are likely to make the same amount of
profit. (T / F)
4 Portfolio managers look at economic conditions when they make decisions
about what assets to put in a portfolio. (T / F)
5 Most portfolios are very similar. (T / F)
6 Most investors have the same financial needs. (T / F)
38 5 Investm ent
5 Read and listen to what these people say about their financial needs.
Match the people 1-3 to a suitable portfolio.
I’m single. I have a I’m married with two
W e are retired. We have
good, well-paid job some savings and would
children. I'm a teacher. I
and I have a lot of like some investments
want to invest some of mi)
th at will give us money
money to invest. I’m money so I can pay for my for extras like holidays
interested in a high children to go to university. and presents for our
return on my money They are still young so grandchildren. W e don’t
and I want to see I have plenty of time. w ant to invest in shares
my investments Going to university is very because we worry that
grow quickly. we may lose our capital
expensive, but I worry about
if the share price falls.
high-risk investments.
Portfolio A ______
This portfolio is well diversified with a mixture of low and high-risk investments. The portfolio
manager has bought shares in some good companies and he thinks these will increase in value
gradually. There is, of course, no guarantee that the higher-risk investments in the portfolio will
make a profit, but he believes they will increase over a ten-year period.
Portfolio B _____
This portfolio includes shares in several companies that produce new technology. If the companies
do well, the rate of return will be very high. However, these investments are quite risky. Technology
develops quickly, so the portfolio manager will soon see if she has made the right decision.
Portfolio C ______
This portfolio includes investments in a savings account that pays a good rate of interest. It also
includes some government bonds. The portfolio manager put it together for investors who prefer a
low-risk strategy, but need a steady income from their investments.
Speaking 6 How would you diversify a $100,000 investment? Write a sample portfolio.
7 Work in small groups and discuss your portfolio. Who has the best portfolio?
Whose portfolio is the most diversified?
Investm ent B 39