Money Matters: 6 Smart Investment Choices

Welcome to Financial Fluency - a newsletter designed to boost your understanding of financial terms and provide you with investment ideas for long-term financial success.

In today’s newsletter:

• A Look at the Markets: EURUSD

• Money Matters: 6 Smart Investment Choices

• Quote of the Day: Warren Buffett

• Word of the Day: Appreciation (business/finance)

• Whenever you are ready, here is how I can help you

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A Look at the Markets: EURUSD

As a project manager for an American company, I’ve been analysing the EURUSD chart.

My project involves Euro-denominated invoices due in October 2025. Between now and then, we need to convert US dollars to Euros.

The chart below illustrates the EURUSD price action in the year following Trump’s first election victory in November 2016. It shows a strengthening of the dollar (downward price action) between the election result and the inauguration in January 2017. Subsequently, the US dollar weakened throughout 2017 (upward price action).

After his November 2024 victory, we observe a similar strengthening of the dollar to remarkably similar levels on the EURUSD chart.

These two areas that I am looking at are highlighted by the shaded yellow boxes.

While history doesn’t always repeat itself, it often rhymes.

Given this pattern, do you believe the US dollar will weaken against the Euro for the rest of 2025?

What would you do? Buy the Euros now or wait?

Money Matters: 6 Smart Investment Choices

Making Your Money Work for You

Recently, we explored inflation, debasement of currency and why money creation affects different groups in society differently. This week, let's tackle a crucial question: If you spend 160 hours per month earning money, how much time should you dedicate to protecting it from inflation and currency devaluation?

Here's the good news: For simple passive investments, you don't need to invest that much time at all.

Let's explore some investment options, evaluating each based on three key factors: risk, potential returns, and how much active management they require.

In no particular order:

1. Bonds: The Traditional Choice

Bonds generally offer lower risk compared to other investments, but don't get too comfortable – they can still experience significant fluctuations, especially when interest rates rise. While returns typically lag behind stocks over the long term, bonds remain a cornerstone of passive investing.

Business English Focus: Fixed Income - Investment products that pay regular interest or dividends.

2. Stocks and Individual Shares

Investing in individual stocks can be tricky. While the potential returns are attractive, few investors consistently outperform broad market indices like the S&P 500. This approach requires active management – you'll need to regularly research and monitor your investments.

Business English Focus: Market Analysis - The study of market behaviour to make informed investment decisions.

3. Equity ETFs: The Simple Solution

Exchange-Traded Funds offer an elegant middle ground. With medium risk and historical returns around 10% annually for indices like the S&P 500, they're an excellent passive investment option. Through dollar-cost averaging – investing regular amounts over time – you can help smooth out market volatility.

Business English Focus: Dollar-Cost Averaging - The practice of investing fixed amounts at regular intervals.

4. Gold: The Traditional Store of Value

Gold maintains a medium risk profile and tends to appreciate over time. Whether you choose physical gold or Gold ETFs, both options offer relatively passive ways to invest.

Business English Focus: Appreciation - An increase in the value of an asset over time.

5. Property Investment: Active Returns

When we talk about property investment, we're not discussing your primary residence (the property you live in). Instead, we're looking at rental properties – either short-term holiday lets or long-term rentals.

Property often returns around 8% of total value annually. Using leverage (mortgages) can increase returns but also increase risk. Despite what you might see on YouTube, property investment is decidedly active – expect 3 AM calls about leaking showers!

Business English Focus: Leverage - Using borrowed money to increase potential investment returns.

6. Bitcoin and Cryptocurrencies: Going Digital

Bitcoin has shown impressive performance over the past 12 years, but comes with significant volatility – expect price swings of 80% or more. While potentially lucrative, cryptocurrency investments require strong nerves and careful consideration.

Business English Focus: Volatility - The degree of variation in trading prices over time.

Making Your Choice

When selecting investments, consider:

• Your risk tolerance

• Available time for managing investments

• Long-term financial goals

• Desired level of portfolio involvement

Remember: The best investment strategy is one you can stick with long-term. Whether you choose passive options like ETFs or more active investments like rental properties, consistency and patience remain key to long-term success.

Quote of the Day: Warren Buffett

We explored potential investment options in the preceding section. Surprisingly, Warren Buffet’s recommendation is remarkably straightforward:

Here, he is referring to option 3 from the previous section: investing in a passive ETF that tracks an index like the S&P 500.

A substantial portion of my portfolio is invested in an ETF that tracks the FTSE All-World index.

Word of the Day: Appreciation (business/finance)

Appreciation - noun - an increase in the value or worth of an asset over time

Business Context: In financial markets, appreciation refers to when investments gain value naturally through market forces. Understanding appreciation is crucial for long-term investment planning and wealth preservation.

Example Sentence:

Word Family:

• Verb: to appreciate

• Noun: appreciation

• Adjective: appreciating

• Past participle: appreciated

Common Business Collocations:

• capital appreciation

• price appreciation

• market appreciation

• asset appreciation

• long-term appreciation

Whenever you are ready, here is how I can help you:

We provide Business English lessons and Cambridge and IELTS preparation courses. You can book an online lesson over Zoom here:

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Disclaimer:

This newsletter is for informational and educational purposes only and should not be construed as financial advice. The information contained herein is generic and does not take into account your individual financial circumstances. You should always consult with a qualified financial professional before making any investment or financial decisions.

Additionally, the authors and/or publishers of this newsletter may hold investments in securities or other financial instruments mentioned herein. These are included for illustrative purposes only and should not be taken as a recommendation to buy or sell such securities or financial instruments.