ESL Podcast 696 - Investing Your Money
401(k) - a plan that helps people save money for retirement, offered by a company to its employees so that individuals can put a certain amount of money into the plan each month, where it is invested, without paying taxes on it until the money is taken out of the plan
In 2011, the maximum amount you can put in a 401(k) is $16,500.
IRA - individual retirement account; a plan that helps people save money for retirement, created by an individual (not an employer), usually allowing money to be invested without paying taxes until the money is taken out of the plan
How much money do you put into your IRA each year?
investment - money that is used to try to make more money, usually by contributing it to a business activity or a loan so that one receives dividends or interest
Buying stock in Uncle Henry's business was a terrible investment and we lost almost all our money.
diversified - with a variety of different kinds of things; not all the same
Growing diversified crops, with many different kinds of vegetables and grains, seems less risky than growing just corn.
portfolio - all the investments owned by someone, especially stocks
Energy-related stocks make up 60% of her portfolio.
bond - an agreement for a company or government to pay back a certain amount of money with interest
Bonds don't pay very high interest rates, but they are safe because the interest payments are guaranteed.
CD - certificate of deposit; an agreement for a bank to pay a certain amount of interest if the individual keeps a large amount of money deposited with the bank for a certain period of time
What are the current interest rates for a two-year, $10,000 CD?
money market - a checking account that pays interest
The bank pays 1.7% interest on our money market account as long as we maintain a minimum balance of $75,000.
to balance (something) out - to maintain a balance or equilibrium; to counteract; to do something that evens out something else
Jenna ate a huge bowl of ice cream yesterday, but she tried to balance it out by working out at the gym for an extra hour.
return - the percentage earned on one's investment; the amount of money received divided by the amount of money invested
We were really pleased to get an 8% return on our investments last year.
mutual fund - a company that combines investments from many small, individual investors and invests all the money in a combination of stocks and bonds to try to get higher returns and better diversification than the individual investors could
Kayla invests $50 in a mutual fund each month.
stocks - shares; partial ownership of a company that can be bought and sold to try to make money
George is researching stocks in the energy and technology sectors.
to go over (one's) head - to not be understood at all because it is too complex or difficult
I tried to read an article about quantum physics, but it went over my head.
to know (something) from (something) - to recognize that two things are different; to understand two things well enough to be able to recognize the differences between them
Before I took that cooking class, I didn't know a whisk from a spatula.
to range from (something) to (something) - to vary between; to have a value between two points
The car's fuel efficiency ranges between 23 and 36 miles per hour.
fixed - not changing; set; with a constant value
Our rent is a fixed monthly cost, because we always have to pay the same amount.
variable - changing; not set; with a value that changes over time
If you want to save more money, try to reduce your variable costs, like your electricity, gas, and water bills.
a fool and his money are soon parted - a phrase meaning that foolish, unwise people do not know how to save their money, so they spend it or lose it and are unable to save it
Do you really think it's a good idea to buy a luxury car before you've finished paying off your student loans? A fool and his money are soon parted.