Investment advice

Investment advice

Prepare.

Read the text and check the vocabulary.

Investment instruments include stocks (equities), bonds and cash. Most investors like to have a diversified portfolio of all three. Stocks offer a higher potential return over the long term, but at a higher risk. Bonds offer a fixed rate of interest, and have less risk. They can be issued by governments (in which case they are called gilts), or companies. Cash sits in a bank account earning interest. It is the safest investment, but offers the lowest returns.

Instead of investing in individual stocks, investors can spread their risk by investing in funds. These can be geographical funds (domestic/regional/international), sector funds (e.g. the technology/financial/health care/retail sectors), tracker funds (that “track” or follow exactly a stock market index suck ad the S&P 500), emerging market funds or small company funds.

Fill in the missing vowels in these words and then check the meaning.

a poor/low/acceptable/competitive/fixed/good/high/current rate of interest

a negative/bright/healthy/positive outlook for the market

a high/medium/low level of risk/return in the short/medium/long term

A client has $50,000 to invest for long-term growth. This client has no other investments. Prepare some advice. Write notes.

Market background and outlook
My national stock markets
Other national stock markets
Sectors with a positive outlook
Outlook for bonds

Suggested % split between instruments + reasons
Domestic equities ...........%	International & specialized equities …..%	Fixed interest …….%	Cash deposits …….%

Equity part of investment: which stocks/funds/regions/sectors? + reasons

Fixed interest part of investment: which bonds/funds? + reasons

Discuss.