Which investment options a person chooses depends on his own criteria for investments. If he has come by his savings the hard way and in a lifetime of work has been able to accumulate a savings fund of $5,000, he may think it best to put it into the savings bank and draw 3% interest. At least he will be fairly sure that his $5,000 will remain intact in number of dollars.

On the other hand, he may look at his hard earned $5,000 and figure that unless he takes a risk his $5,000 will always be just $5,000, and only by running a risk will he be able to make it grow to say $50,000. He may recognize fully that he may lose the $5,000, but he concludes if there is no risk there is no possibility of large gain.

How a person invests is entirely up to him, and it is hoped that this book may have served the twofold purpose of showing a person in a general way what opportunities there are in which to invest his funds and of helping him to clarify in his own mind just what his investment objectives are—safety or hope of specu­lative gain or some objective between these two extremes.

Criteria For The Selection Of Investment Options

In outlining a program of investment the author, of necessity, must assume certain things about the investor, which may or may not be true, and he must in some measure attempt to advise the investor and substitute his judgment for that of the investor. This is unfortunate, but there is no alternative. It is hoped that the investor will realize that these are only recommendations and that he is the one who must ultimately decide where to invest in light of his needs and desires and of all the facts. The best that can be done to make this situation clear is to outline the principles, which underlie the presentation of the invest­ment programs, which are contained in this chapter.

The first characteristic of an investment, which has been stressed, is safety of the capital. A large proportion of investors and potential investors want to know that when they invest $10,000 they are going to get back $10,000, not $9,000 or $4,000, as a result of a declining stock market or for other reasons. This pres­ervation of the amount initially invested is an underlying principle of this book. While the stock market is in many ways an excellent opportunity for investment there is no assurance whatever that if a person puts in $10,000 he will get back $10,000, and the desire to preserve the amount originally accumulated is con­sidered to be a primary objective of a great proportion of investors.

When considering investment options, certainly the stock market should not be ignored, and stocks should be purchased by a large proportion of investors; but there are other things in which to invest money, and some of these other things may provide for the preserva­tion of capital better than the stock market. Yet to assure growth in line with the development of the American economic machine, stocks should be included in the portfolio of many, if not most investors.

The second important characteristic of an investment should be yield. The whole purpose of the book is to show that while banks preserve the number of dollars of an investment well, they do not provide the high yield that many in­vestors would like and can secure without a dangerous increase in the risk. The banks secure higher rates than what they pay depositors, and their high rate business cannot be considered unduly risky. There must therefore be a number of places in which funds can be placed with relative safety which at the same time give the investor a larger percentage return on his capital.

The third important characteristic is tax benefits, especially for the higher income investor. When one is in the 91% tax bracket there is little point in running any risk to earn an extra $10,000 a year when he can keep at most $1,000 of it. For these higher income investors there must be an emphasis on types of investment, which will allow them to keep more of the extra $10,000.

Principles Of Investment For Realizing These Criteria

In order to meet these general criteria of investment, namely relative safety of the capital, high yield and tax benefits, certain investment principles must be followed when considering investment options:

Some of the funds of any investor must be placed in safe, although relatively low yield, opportunities. This precaution is taken so as to safeguard a portion of the fund in case the more risky investments should run into trouble. It is taken for the additional reason that opportunities present themselves from time to time which can be taken advantage of if there is ready cash available on short notice. Very often excellent opportunities present themselves unexpectedly, and ready cash is the only way to profit by them.

In almost any investment there should be collateral, which is held by the investor. In the stock market the investor owns a part of the company, and this ownership is evidenced by the stock certificate. If he buys a bond he has evi­dence of a debt of the corporation on which he can foreclose if the corporation cannot pay. If he finances the purchase of a house or the renovation of a house he should have a mortgage, either a first or second mortgage, which means that if the home owner cannot pay, the investor can take over the home through legal proceedings. If funds are lent which enable the borrower to purchase, let us say, a mobile home or a boat, the investor should keep title to the mobile home or the boat until it is paid for in full. This title is in the form of a conditional sales contract, which says that until the object is paid for in full the investor owns it. Only then does the title pass to the borrower.

Wherever possible the investor should have the guarantee of some other per­son or organization insuring that the lender will be paid. This guarantee is known as recourse. Where a dealer sells a customer a mobile home the dealer should guarantee that the investor will be paid. If the customer does not pay, the dealer must immediately pay off the entire sum due. Such a guarantee is not always possible to secure, but it is highly desirable from the point of view of further safety of the investment.

Since the purpose of the book is to present investment options which an investor or saver can get a higher yield on his money by, than that offered by the savings bank, this yield element of investment is stressed. Paradoxically, high yield insures safety. It insures safety because it provides an excess of income against which losses can be charged. Some of the highest yielding investments in the country are small loans (although these are not suitable for the individual investor). Every month the financial institution holding small loan receivables writes off its books loans which have defaulted or are uncollectible. These are admitted losses, and they are anticipated; but the high yield of the receivables allows these losses to be written off and still a generous profit to be secured.

If, for example, an investor has $200,000, he can invest it in a savings and loan association at 4% and receive annually $8,000. If, on the other hand, his higher yield investment program allows him to realize 10% instead of 4%, he receives annually $20,000. He can afford to lose $12,000 a year in bad loans and still be in the same position he would have been in had he kept his money in the building and loan association.

This principle of excess income to cushion losses leads us to the next invest­ment objective: diversification. If a person has $10,000 he should not put it all into second mortgages. A business recession and slump in real estate values might cause him to lose a material part of his second mortgage investment. If a portion of his funds is in building and loan associations, in all probability he would not lose a penny of his investment. Because of the decline in price level in recessions he would be better off in purchasing power with his funds in the building and loan association. In the recovery phase of the business cycle, even high yield investments might not be good as compared with a rising stock market. The investor should diversify at all times as to types of investment, neither keeping everything in the savings bank nor in the stock market.

When looking at investment options, in addition to diversifying as to type of investment, the investor should diversify as to amounts. It is certainly a convenient thing to lend all of one's funds to an apparently sound finance company and receive one check each month for the interest, but it is not sound. The risk is not spread, and finance company failures are certainly not unknown.

In the entire selection of investments the principle is followed that one man must be able to handle the whole portfolio of investments in his spare time. This principle limits the investment opportunities and the over-all yield as well. Some of the yields which we think reasonable would be considered far too low by finance companies and other financial institutions; but these companies are equipped to handle the details of such high yield investments and to police them. These two things require manpower, and often a great deal of manpower. We are considering the investor who holds a position and who can invest only in his off-work hours.

The next principle is leverage. By leverage is meant investment opportunities, which can be borrowed against at a bank. Stock can be borrowed against. A short-term loan secured by good collateral can be borrowed against. A first mortgage can be borrowed against, and sometimes a second mortgage. Unsecured loans do not usually provide the security required by a bank to induce it to lend. Neither do real estate syndications.

The obvious reason for making provision for leverage is to enhance income and consequently yield. If a person holds the demand note of a finance company and at the same time some collateral given him as security by the finance com­pany, possibly a mortgage, he very likely can take the demand note and the mortgage to the bank and borrow against them. If he has lent the finance com­pany $10,000 at 12%, he may be able to borrow from the bank against this note $7,000 at 6%. He can relend this $7,000 to the finance company at 12%, so that the difference between his cost of the money (6%) and what he gets for it (12%) is 6%. On his borrowing of $7,000 he nets $420 per year.

This leverage is the secret of success of almost every financial institution, whether it be a bank, a building and loan association or a finance company. Leverage of course involves risk, because the investor can more than lose his own money if he is not careful. He can lose the bank's money too.

Although we have been talking about and emphasizing high yields, the yields, which we have described in this book, are conservative, considering the prevail­ing yields for the types of investments we are discussing. We have deliberately chosen to make the yields low for conservatism. Finance companies have rate structures. They may be built around an average yield of say 12%. For the type of investment sought by such finance companies at 12%, we have used a figure of 11% or 10% because by offering such a lower money cost to the borrower the very soundest investments of the particular type can be secured. The professional investor will not be satisfied with the yields we have recommended here. They are conservative and meant for the nonprofessional investor who is not par­ticularly anxious to run a risk, which may mean the end of his savings.

A program is now presented for various amounts of capital:

$5,000
10,000
25,000
50,000
100,000
500,000
1,000,000

THE $5,000 PORTFOLIO

Investment	Amount	Rate Of Return	Yearly betuen In dollors
Time deposit	$1,500	5%	$75.00
Finance company deposit	1,000	6	60.00
Finance company loan	1,500	12	180.00
Building and Loan Association	500	5	25.00
Savings Bank	500	3.75	18.75
	$5,000		$358.75

ANNUAL YIELD - 7.2%

The underlying principles in laying out the investment program of the $5,000 investor are that he has not much capital, that he probably had to work hard and long to accumulate his $5,000 and that he is not a high income earner. These assumptions may not be correct, but they are the ones used here. Be­cause $5,000 is not a large sum to invest, conservatism has predominated in making recommendations for investments. Hah0 of the entire portfolio is in conservative investments, which involve no risk—a time deposit in a bank, a building and loan association deposit and a savings bank deposit. One-fifth of the portfolio ($1,000) is in a deposit in a finance company at 6%, while 30% or $1,500 is in the form of a short-term loan to a finance company at 12%. The term should not be over one year.

The annual yield on this $5,000 investment fund will be $358.75 or 7.2%.

THE $10,000 PORTFOLIO

Investment	Amount	Rate Of Return	Yearly betuen In dollors
Finance company load	$5,000	12%	$600.00
Finance company deposit	3,000	5	150.00
Building and Loan Association	1,000	5	50.00
Savings Bank	1,000	3.75	37.50
	$10,000		$837.50

ANNUAL YIELD - 8.4%

For the saver who has accumulated $10,000 it is felt that a larger proportion of his savings fund can be invested in high yield programs. One half of the fund is proposed to be invested in finance company loans and the rest kept in secure investments. Because of the larger proportion of the fund in high yield invest­ments the over-all yield of the fund is 8.4% annually—$837.50.

THE $25,000 PORTFOLIO

Investment	Amount	Rate Of Return	Yearly betuen In dollors
Stock Market	$10,000	X(10%)	$1,000.00
Finance company loan	10,000	12	1,200.00
Finance company deposit	2,500	6	150.00
Building and Loan Association	1,500	5	75.00
Savings Bank	1,000	3.75	37.50
	$25,000		$2,462.50

ANNUAL YIELD - 9.8%

If the stock market could be depended on to rise as it did in the year 1958 or early in 1960 there would be considerable reason to recommend that one put all of his funds into it and not look at other investment options. But this is not the case, and even when the market in general rises, particular stocks decline. For this reason the stock market has not been recommended for the smallest investors, and only with a larger investment portfolio can it be wholeheartedly endorsed as an outlet for a substantial por­tion of an investor's portfolio. What can be earned is problematical, but from a study of the history of the stock market since the war, 9.8% annual return, includ­ing dividends, is not unreasonable and is considered to be a conservative esti­mate. The "X" indicates that the rate of return is problematical.

While 40% of the investment portfolio is recommended to be placed in the stock market, another 40% is recommended to be placed in a finance company loan at 12%. Ten per cent ($2,500) should go into a finance company deposit at 6%, and the remaining $2,500 can go into the safest investments—building and loan associations and savings banks.

With this larger portfolio the riskier and higher yield investments can be emphasized, and the over-all yield should be 10.2%. The monthly return should be over $200.

THE $50,000 PORTFOLIO

Investment	Amount	Rate Of Return	Yearly betuen In dollors
Stock Market	15,000	(10%)	1,500
Finance company loan	20,000	12	2,400
Real estate syndication	10,000	12	1,200
Finance company deposit	3,000	3	180
Savings Bank	2,000	3.75	75
	$50,000		$5,355

ANNUAL YIELD -10.7%

Thirty per cent of the portfolio of $50,000 might be placed in the stock market. As in the case of the $25,000 portfolio this is an investment in possible if not probable growth, and if the market or the stocks selected decline the conse­quences are not so serious as in the case of a very small investment fund. Then too, a $50,000 investment fund assumes a good independent income, and appreciation in stock price does not involve the payment of tax on ordinary income at the tax rates on higher incomes.

For this same reason 20% of the fund ($10,000) is placed in a real estate syndication yielding 12% of which 75% of the yield, or $900, will probably be represented by depreciation and thus is not taxable.

Double this amount is recommended to be placed in a 12% finance company loan. This sum might possibly be lent to an industrial company. In the smaller portfolios the finance company has been recommended rather than industrial or commercial companies because of the greater liquidity of finance companies. Actually an industrial loan may be reasonably safe.

It is recommended that $3,000 be placed in finance company deposits, as these are fairly liquid, and only $2,000 be retained in the savings bank for im­mediate use. Of course cash can be secured immediately, or very nearly so, from the sale of stock in case liquid funds are required on short notice.

THE $100,000 PORTFOLIO

Investment	Amount	Rate Of Return	Yearly betuen In dollors
Stock Market	$25,000	X(10%)	$2,500
Finance company loan	25,000	12	3,000
Real estate syndication	25,000	12	3,000
Conditional sales contracts	10,000	13	1,300
Foreign loans	10,000	12	1,300
Building and Loan Associations	3,000	5	150
Savings Bank	2,000	3.75	75
	$100,000		$11,225

ANNUAL YIELD - 11.2%

In the case of the $100,000 portfolio, $25,000 or 25% might be placed in the stock market. This is a smaller percentage than in the case of the $50,000 port­folio because more of the larger fund can be placed in more risky high yield investments. They provide a cushion of earnings, which can be used to absorb losses where this cushion is not available in the case of the smaller portfolios. The 25% of the assets in the stock market it is hoped will provide a low tax capital growth. A similar amount recommended for placement in a real estate syndications not only provides a tax shelter of perhaps 75% of the income from this source but provides a high yield as well. The same amount placed in the finance company or industrial loan should yield the same percentage—12%. Conditional sales contracts yield slightly more than the finance company or industrial loan, but only slightly more. This slightly greater yield means that these contracts will be of a prime type and thus relatively safe, although they are not considered to be safe enough for investment by holders of the smaller portfolios. Second mortgages at this yield or higher can be substituted.

For the first time a foreign loan appears in a portfolio. This type investment requires both knowledge and careful investigation.

Only 5% of the fund is placed in absolutely safe investments, building and loan associations and savings banks, but the dollar amount is high for a com­paratively low yield investment—$5,000.

In the $100,000 portfolio leverage is provided for by the fact that bank funds can possibly be secured by using as collateral for such loans every item except the real estate syndications.

The over-all yield is 11.2%, and the total annual dollar yield $11,225.

THE $500,000 PORTFOLIO

Investment	Amount	Rate Of Return	Yearly betuen In dollors
Stock Market	$150,000	X(10%)	$15,000
Finance company loan	80,000	12	9,600
Real estate syndication	100,000	12	12,000
Foreign loans	90,000	11	9,900
Promissory notes	50,000	20	10,000
Second mortgages	20,000	20	4,000
Building and loan or Savings Bank	10,000	4	400
	$100,000		$60,900

ANNUAL YIELD - 2.2%

Roughly the same proportion of the funds in the $500,000 portfolio is recom­mended to be placed in the stock market as in the case of the $100,000 portfolio. Again it should be mentioned that this is to a great extent risk capital, and the yield in a particular year might be zero or even negative; but the portfolio is large enough and has enough other income to permit this risk.

Twenty per cent of the portfolio ($100,000) is placed in real estate syndica­tions because of the necessity for a tax shelter in a portfolio of this size. At least $9,000 income annually should be thus sheltered, and the stock appreciation is to a great extent tax free.

In this portfolio there is not the great emphasis on the finance company or industrial loan because of the ability of this fund to run the risk of more lucra­tive investments. Ninety thousand dollars can be invested in foreign loans at 11%.

It is recommended that $50,000, or 10% of the assets, be placed in promissory notes, and these can be high yielding, although greater risk, investments—20%.  In the same way $20,000 worth of second mortgages are recommended at 20%.

All of the recommended investments with the exception of the real estate syndication create the possibility of leverage through which the investor can borrow at the bank on collateral and reinvest the borrowed funds at at least double the borrowing rate. While the over-all yield is 12.2%, borrowings and reinvestment can raise this rate significantly.

THE $1,000,000 PORTFOLIO

Investment	Amount	Rate Of Return	Yearly betuen In dollors
Stock Market	$200,000	X(10%)	$20,000
Finance company loan	100,000	12	12,000
Real estate syndication	250,000	12	30,000
Conditional sales contracts	100,000	15	15,000
Promissory notes	50,000	20	10,000
Foreign loans	125,000	12	15,00
Second mortgages	50,00	20	10,000
Foreign mortgages	75,000	15	11,250
Building and loan or savings bank	50,000	4	2,000
	$100,000		$125,250

ANNUAL YIELD - 12.5%

This portfolio does not differ greatly in types of investment recommended or proportions recommended from the $500,000 portfolio. It adds the item of foreign mortgages at a minimum of 15%. More can be secured, and a $1,000,000 fund can afford the risk of high rate investment outside the United States.

A fund of this size provides so much income and places the owner in such a high tax bracket that (1) more risky investments can be made, (2) more tax sheltered investments are required, and (3) more funds can be kept in reserve at relatively low rates so as to be prepared for opportunities to invest as they present themselves. For that reason $50,000 is recommended as a reserve in a finance company deposit or deposits.

The over-all yield of the fund is 12.5%.

In this largest portfolio of investment options, leverage is both possible and desirable. Borrowing by the investor of one third of his capital ($333,000) will enable him to realize a net of 6% on it (his return of 12% less his cost in bank interest of 6%). His annual income will be increased by $20,000—from $125,000 to $145,000, and this added income will increase the cushion for losses which every investor takes periodically. The larger the portfolio the greater the possibility of leverage; but also the greater the possibility of some losses. More money is risked and whereas a man with $10,000 either invests in the safest things or picks his investments carefully, the large investor has more funds so that (a) a small loss concerns him less and (b) he has more funds to put to work and thus cannot pick so carefully.

Advice is always very cheap, and if things don't turn out as the advisor plans he can make a firm resolve to do better next time. Meanwhile the person who received the advice may have lost all his money depending on the inaccurate advice. It is well, therefore, to see in the case of this book what the advisor puts his own funds into. There is the added benefit in outlining the author's own investment program of showing how anyone's investment program must be based on his particular investment needs and objectives. Further, these needs are by no means static. They change from time to time, so that what might be considered a good and balanced investment portfolio in 1960 might be entirely unsuitable in the year 1961. It should consequently be changed to meet new needs and objectives.

1960 INVESTMENTS

• Common stock
• Real estate
• Finance company loans
• Conditional sales contracts
• Promissory notes
• Bank and building and loan deposits

 1961 INVESTMENTS

• Common stock—greatly reduced
• Finance company loans—increased
• Conditional sales contracts
• Promissory notes
• Bank and building and loan deposits—increased
• Tax free bonds
• Mutual funds
• Foreign loans

A large proportion of the portfolio was in the common stock category in the year 1960. A major part of this stock was sold during the year at a gain. In the same year the real estate was sold at a gain. The result of these two transactions was that cash was increased materially at the same time that a good income was secured for the year 1960. There was thus not the pressing necessity to earn more in the latter part of the year. In fact the size of the tax liability dictated invest­ment in things, which would not add to income in the year 1960.

For our family, real estate takes the place of real estate syndications in the ordinary recommended portfolio. There are several reasons for this investment options policy. The first is that all of the gains accrue to us and none to the syndicators. Secondly we have studied the subject and believe we know real estate at least better than the lesser syndicators. Thirdly it is always best when you have what you own in your hands. When it is in someone else's hands you may never get it back. We own the real estate. We can see it. And even if the value declines it is still a very tangible thing that we own. We know the actual costs and we know exactly what we have, far better than we can ever know those facts about a syndication.

Then too we enjoy fixing property up, improving it and increasing its value.

Since the sale of the stock and the sale of the real estate increased investible funds and at the same time provided a good income to us in the year 1960 we began looking around for investments with tax advantages. We bought a fairly large block of Chesapeake Bay Bridge and Tunnel Authority Bonds. These had a yield of almost 6%—all non-taxable. While state and municipal tax-free bonds usually have lower yields we were able to buy some of this series—5¾%bonds— at under 100. The Authority is a new one, and the bridges and tunnels are now under construction. The road system has not been in operation and the earning capacity of the Authority has thus never been tested. Although I have absolutely no reason to think this will happen, there is always the possibility that it may not fulfill expectations and these high rate bonds, at the bottom of the preference series may be defaulted. But the Authority will not even be operating for two years and will have no chance to be tested before that time. There will thus be no change in earning capacity to effect the price of these bonds at least until the road system is operating. Before that time I may see fit to sell my bonds and look for something else. In the meantime 6% tax-free is an enormous yield. It equals 12% for the man in the 50% tax bracket, and it is a remarkably sound investment at 12%.

Since at the time our stock and real estate holdings were sold the outlook for growth stocks appeared good, a sizable sum was invested in a growth mutual fund. Particular stocks could have been picked for our portfolio, but we were going away for three months and it was difficult to follow the market closely. Unless he exercises eternal vigilance a person can lose a good deal of money in a short time in stocks. A growth fund was selected that had a good growth record. This fund was a no-load fund, in that there was no selling commission of around 8% involved. When I sell out I will lose only 1% of my investment—not 8% plus 1%. In the three months that we were away the fund grew 5%—an annual growth rate of 20%—anything but poor.

Approximately the same amount was placed in a nine-month loan to a firm in Mexico. This loan yields a net of 12% per year, and it is guaranteed by a large American firm listed on the New York Stock Exchange. The great advantage to this loan is that it was purchased at a discount to yield 12% per year. That means that there is no income until it is paid. Since 1960 was a high-income year for us we threw the earnings on this investment into the next year, which would almost certainly be a lower income year for us. The great danger in this loan lies in the fact that although guaranteed by a reputable American firm it is payable in pesos. If there is a devaluation of the peso I get the same number of pesos back but they translate into fewer dollars. I could have invested in loans payable in dollars, but I felt the guarantee of the American firm outweighed every other consideration.

A very material part of the cash resulting from the sale of the stock and the real estate was invested in a finance company loan yielding 12% per year. Pay­ments are made monthly at the rate of 1%. I know the particular company well and have had money invested in it for six years. Only because the company needed cash with which to purchase another company was my 12% money welcome. The payment of interest monthly results in a higher rate than payment once a year or payment at intervals less frequent than monthly. If $10,000 is invested January 1, the interest of $100 which is paid February 1 will earn 11 months' worth of interest by the end of the year. If interest is paid only at the end of the year there are no monthly increments of interest to earn anything during the year.

During the year one of the promissory notes was paid off. These arose from shipments of one dealer to another. The latter didn't have the immediate cash to pay for the shipment and gave the shipping dealer a note payable in three months. The shipping dealer needed funds to operate his business and thus offered me the notes at a discount; but since he was always shipping things out on three months' credit he continually asked me to discount his notes. These notes yield 31% per year.

The conditional sales contracts are sales contracts on mobile homes (house trailers) The yield on these is about 15% per year, and there are insurance profits to be added; but the contracts are too far from our home and too difficult to supervise or take care of in case of delinquencies. They will be eliminated.

For the year 1962 the investments will read like this:

1962 INVESTMENTS

• Common stock—reduced
• Real estate—new purchases
• Finance company loans—slightly increased
• Tax free bonds—same
• Mutual funds—slightly reduced
• Foreign loans—increased
• Foreign finance company deposits—new addition
• Bank and building and loan deposits—greatly decreased

For the year 1962 we will again buy real estate, although we would certainly welcome an opportunity to invest in a good syndication. We will sell some of our common stock to take a capital gain in the year 1962. We have a fair amount of money in finance company loans, and we will diversify in the year 1962. We will increase our mutual fund holdings and will make more foreign loans, probably in Mexico or in England. We will also very likely make deposits in English finance companies of the highest quality at 8%. We will get the money to invest in this way by drawing down our bank and building and loan associa­tion deposits. What we have left will not be invested in anything yielding under 4%, and some will be invested at 5%. Our annual goal is a yield of 15%, and out of this 15%, our portfolio, after our living expenses and taxes have been deducted, must increase by 10%. This is a very realistic goal and not difficult to achieve.

There is really one purpose in presenting the foregoing investment options programs, our own included, as there is really one purpose in writing this book: to make information available to the investor which will aid him in working out his own program of investment, and the purpose of his program should be to get a higher return on his money. If he wants to insure that his savings remain intact, he can of course do this by putting his funds in safe deposit boxes, perhaps tak­ing extreme precautions by putting them in several boxes in banks in different cities or in different countries. Perhaps he can even get gold and put this in foreign safe deposit boxes in countries the least likely to be bombed in possible future wars.

Or he can, if he is a bit more daring, keep all his funds in government insured accounts—in savings banks and in building and loan associations—being careful not to keep over $10,000 in any one account, not even in billion dollar banks, since these might fail.

All life, however, involves some risk, and there is little reason to believe that the anticipated rewards offered by many of the investment opportunities out­lined are not worth the risk involved. The insured institutions themselves, the banks and savings associations, invest in such opportunities every day, and they must so invest. Otherwise they would have to close their doors since there would be no point in their existence.
A person who has a fund of savings should see to it that he is adequately paid for the use of his money when he invests it or lends it and at the same time be assured that his money is protected against loss.

In our economic system capital is worth something, and it must be paid for. It is generally earned only with difficulty, and it is highly valued by its owner. He is entitled to a return on his money and to as good a return as is available in our money markets. It is hoped that the information supplied here will be the beginning of his accumulation of that knowledge which will guide him in locat­ing those opportunities which will allow him to realize the maximum return from his investment options commensurate with the risk he wants to run.