Welcome to English as a Second Language podcast number 696, Investing Your Money.
This is English as a Second Language podcast episode 696.
I'm your host, Dr. Jeff McQuillan.
Coming to you from the Center for Educational Development in beautiful Los Angeles, California.
This episode, like all of our episodes, has a learning guide.
Go to our website at eslpod.com and download the 8-10 page guide.
You'll get a complete transcript of everything we say on this podcast, not just the dialogue, as well as a lot of other good information to help you improve your English.
This episode is a dialogue about investments taking your money and putting it somewhere so that you can make more money.
Let's get started.
My company offers a 401k plan.
Do you think I should have one?
Yes, definitely.
I had a 401k account when I worked for McEw Corp.
And when I started working on my own, I converted it to an IRA.
Okay.
Look, you want to have a diversified portfolio of lower-risk and higher-risk investments.
On the low-risk end, put money in bonds, CDs, or a money market account.
You want to balance that out with some riskier investments that may bring a higher return, such as mutual funds and stocks.
Wow, all of that just went over my head.
I don't know a CD from a bond.
It's really simple.
Your choice ranges from a fixed return to a variable return, and the variable investments carry different levels of risk.
My head hurts.
Are you sure I really need all of these investments?
Not all of them, but it would be smart to invest your money in something.
Not if I spend it all first, right?
Right.
You know what they say, a fool and his money are soon parted.
Our dialogue begins with Karen saying to Jimmy, my company offers a 401k plan.
Do you think I should have one?
A 401k is the name the government gives a certain kind of retirement savings plan.
It helps people save money by allowing the company to take money out of your weekly or monthly paycheck and put it into some sort of investment, typically some sort of stock investment.
The advantage of the traditional 401k plan is that you don't have to pay taxes on the money that you put into the account until you retire.
That's the traditional 401k.
It's a plan that's offered by private businesses typically.
Government organizations have somewhat different plan names, but they have the same function.
They do the same thing.
Jimmy says to Karen, yes, definitely.
I had a 401k account when I worked for McHugh Corporation, the name of the company.
And when I started working on my own, I converted it to an IRA.
An IRA is another kind of retirement savings account.
This helps you save money.
It's something that you open, not your employer.
The 401k is something that the person or the company you work for operates.
An IRA is something that you can open on your own.
And there are different kinds of individual retirement accounts.
Karen says, I really don't understand any of these investment options.
Investment is when you use your money to make more money by buying stocks or buying a building or a house or part of a business, and so forth.
Karen says I talked to an investment specialist someone who's an expert at my bank, but I left her office just as confused as when I went in, meaning she went to talk to the person, but she was still unclear.
She was confused after she talked to her.
Jimmy says, look, meaning pay attention to what I'm going to say.
You want to have a diversified portfolio of lower risk and higher risk investments.
Diversified means it has a lot of different things in them.
They're not all the same.
A portfolio here means all of the investments that you own, especially stock investments.
So a diversified portfolio is one where you own a lot of different kinds of stocks.
Jimmy says you should own low or lower risk and high or higher risk investments.
On the low risk end.
Meaning some of the low risk options, the ones that are not going to be likely to lose you any money, but you probably won't gain a lot of money either are bonds, CDs and money market accounts.
Bonds are basically an agreement between a company or a government and you to give you a certain amount of money with interest after a certain number of years.
There are short term bonds, bonds that only last a few months or a few years.
There are long term bonds that could last 15 or 20 years.
In both cases you give the company, you lend the company essentially some money and the company pays you back with interest at the end.
CDs stand for Certificate of Deposit.
That is similar, but here you give your money to a bank and the bank keeps your money for a certain amount of time six months, a year, two years and at the end of that time they give your money back with interest.
So you're kind of loaning your money to the bank and the bank is paying you for that loan by giving you interest on your CD.
CDs are very safe investments.
You don't make a lot of money, but you probably won't lose your money either.
A money market is perhaps the safest kind of investment, the least risky investment.
That's basically a checking account with your bank, and they give you interest.
They pay you money for keeping your money in the bank.
So we have bonds and CDs and money markets.
These are low-risk investments.
Jimmy says you want to balance that out with some riskier investments that may bring a higher return, such as mutual funds and stocks.
To balance something out is a phrasal verb meaning to keep a balance, to keep things even.
We sometimes talk about eating a balanced meal. or having a balanced diet.
You should have some vegetables, some grains, some fruit, perhaps some meat, some fish, some candy.
That's a big part of a balanced diet, eating a lot of candy.
Well, this is a balanced portfolio.
So if you have low-risk investments, then you should have something on the other end, high-risk investments.
That's to balance things out.
You want a riskier investment in order to get a higher return.
Return when we're talking about stocks and investments, is the percentage of money that you make or earn on your investment.
If I give the bank 100 and at the end of six months the bank gives me 105 with 5 in interest, my return was 5.
So all investments have a return.
Sometimes you lose money, of course.
High-risk investments usually have higher returns, but it's also more likely that you will lose money.
So in order to get the higher return, you have to take more of a risk.
Return has a number of different meanings in English.
Take a look at our learning guide for some additional explanations.
Some higher risk investments include mutual funds and stocks.
Let's start with stocks.
Stocks are partial ownership investments. of a company.
That is, if you buy, for example, Apple stock or Microsoft stock, you own a little bit of that company.
So if the company does well, you will probably make money.
Stocks are also sometimes called shares, S-H-A-R-E-S.
A mutual fund is typically a collection of different kinds of stocks.
Usually you have many investors who give money to a company that owns the mutual fund and they buy a lot of different kinds of stocks or a lot of different kinds of investments.
So it's something where you're not buying the individual stock directly.
You're buying ownership in this mutual fund and the fund will then go out and buy the stocks or bonds or whatever investment they are investing in.
Karen says, wow, all of that just went over my head.
To go over your head here means not to understand what the person is talking about.
Usually because it's very complicated and you don't have much experience in it.
Karen says, I don't know a CD from a bond.
This general expression I don't know something from something else means you can't recognize the difference or don't know the difference between these two things.
The opposite would be to know something from something else, and that would be to understand the differences.
But Karen doesn't.
Jimmy says it's really simple.
Your choice ranges from a fixed return to a variable return, and the variable investments, or variable return investments, carry different levels of risk or have different levels of risk ranges.
For something to range from something to something else means that these are the maximum and minimum, or this is the difference in value from the low end to the high end.
In this case, the investment ranges from fixed returns to variable returns.
Fixed here means it doesn't change.
It has a constant value.
The bank says that they will give you 5% interest on your CD.
That's not going to change.
It's not going to go up.
It's not going to go down.
For stocks and mutual funds and other variable return investments.
It could go up or it could go down.
Variable means changing.
The value changes over time.
The word fixed has a couple of other meanings in English.
Take a look at our learning guide for some more information.
Karen says, my head hurts.
That's kind of a funny expression to mean this is so much information or difficult information to understand.
I can't understand it all.
She says, are you sure I really need all of these investments?
Jimmy says, not all of them.
Karen says, Right?
She's making another joke.
She's saying, well, I don't have to invest my money if I spend it.
Of course, if you spend it, then you won't have money in the future.
This is one of the great lessons in life that one must learn as you grow older.
And some people never learn that if you don't save something today, you won't have anything tomorrow.
Karen is joking by saying that she doesn't have to invest if she spends all of her money now.
Jimmy says, right, meaning that's right, that's correct.
Then he uses an old expression, a fool and his money are soon parted.
A fool is an idiot, a stupid person, an unwise person.
If you have a stupid person, usually or often they will lose their money.
To be parted means to be separated from.
So the money and the fool are separated because the fool loses his money.
So a fool and his money are soon parted.
Parted means that people who aren't very smart usually lose their money.
They spend it or someone takes it from them in some fashion, in some way.
Now let's listen to the dialogue, this time at a normal speed.
My company offers a 401k plan.
Do you think I should have one?
Yes, definitely.
I had a 401k account when I worked for McHugh Corp.
And when I started working on my own, I converted it to an IRA.
I really don't understand any of these investment options.
I talked to an investment specialist at my bank, but I left her office just as confused as when I went in.
Look, you want to have a diversified portfolio of lower risk and higher risk investments.
On the low risk end, put money in bonds, CDs, or a money market account.
You want to balance that out with some riskier investments that may bring a higher return, such as mutual funds and stocks.
Wow, all of that just went over my head.
I don't know a CD from a bond.
It's really simple.
Your choice ranges from a fixed return to a variable return, and the variable investments carry different levels of risk.
My head hurts.
Are you sure I really need all of these investments?
Not all of them, but it would be smart to invest your money in something.
Not if I spend it all first, right?
Right.
You know what they say, a fool and his money are soon parted.
We try to balance out the more serious topics on our podcast with hopefully some funnier ones.
That's the job of our wonderful scriptwriter, Dr. Lucy Say.
From Los Angeles, California, I'm Jeff McQuillan.
Thank you for listening.
Come back and listen to us again sometime on ESL Podcast.
English as a Second Language Podcast is written and produced by Dr Lucy Say, hosted by Dr Jeff McQuillan.
Copyright 2011 by the Center for Educational Development.
