GoalCompare a broker with e-trading, and list safety tips for online investors.
New words
broker · a person who buys and sells shares for an investore-trading · buying and selling shares yourself on a website or an approbo-adviser · an online helper that gives guidance and services about moneyscam · a trick to take someone’s money by lying
Explanation
In the past an investor used a broker, a person who did the buying and selling of shares for them. Today, with the internet, electronic trading, or e-trading, lets the investor do it alone on a website or an app. Some of them have robo-advisers, online helpers that give guidance and services. The benefits: more people can invest, companies can trade with each other faster wherever they are, and investors get more independence and easy choices. But remember: a robo-adviser is a program that follows rules and data. It does not know you, and neither a broker nor a program can promise that a price will rise. Stay safe. Only adults invest. Children do research only with a teacher. Use only trusted, official sites. Keep codes and passwords secret, as you learned in Week 10. Be careful with promises like ‘Double your money fast!’, which are usually scams. Tell a grown-up if you are unsure.
Way
Who does the deal?
Good points
with a broker
the broker
a person you can talk to
e-trading
the investor, on a site or app
more independence; open to more people
e-trading with a robo-adviser
the investor, with online guidance
quick guidance at any time
Worked examples
With a broker
With e-trading
investor asks broker
investor uses a site or app
broker does the deal
investor does the deal
Two ways to buy a share. With a broker: the investor tells the broker, the broker does the deal. With e-trading: the investor uses a website or an app and does it alone. The end result is the same, but the second way gives more control.
Seif’s uncle, an adult investor, sees an advert: ‘Double your money in one week!’ Real investing never promises this, because prices can fall. He does not trust it, and he tells a grown-up in his family. That is a wise reaction.
Robo-adviser
Broker
quick, any time
a person who listens
follows rules and data
can explain in words
Can a robo-adviser beat a broker? Malak says a robo-adviser is quick and works any time. Jana says a broker is a person who can listen and explain. Both have good points. Neither can know the future. Good answers give reasons.
Class activity
Pretend market game. In a group of four, invent three shops and give each 20 paper shares. Each person ‘buys’ shares of one shop with paper coins. The teacher reads a made-up news card, such as ‘Shop B sold many cakes’, and the group moves the prices. Work out who gained and who lost. Then write one sentence: why can nobody be sure about the future? No real money, no real shops.
Practice
1
What is e-trading?
Investors buying and selling shares themselves on a website or an app.
2
What is a robo-adviser?
An online helper that gives guidance and services about money.
3
Give two safety tips for online investors.
For example: only adults invest; use trusted official sites; keep codes secret; ask for help.
4
An advert says ‘Double your money in a week!’ What do you do?
