1. High Fixed Yields - The smaller investor or possessor of a savings account has really very few alternative employments for his fund of savings. He can either put it into the stock market, including the mutual funds, or he can put it into the sav­ings bank. In the stock market he has the hope of a big gain. But in all probability his fund of savings was not easily acquired, and the effect on him is devastating when the stock market or the particular stock he owns goes into a decline.

2. Investment? - In this book we are going to explore a number of different types of investment, but we are going to concentrate on investments, which have one characteristic: high yield consistent with the preservation of the capital invested. This definition means that investment in a new corporation that is just starting out is omitted as is investment in partnerships as a partner and in individual proprietorships whether they be shoe shine parlors or stock brokerage firms.

3. 1st & 2nd Mortgages - While the theory as to exactly what a mortgage is varies among states in the Union, a mortgage is for all practical purposes a promise on the part of a property owner to pay with interest a certain total sum in periodic payments over a given number of years to a person who lent him this sum of money. If the payer (mortgagor) does not meet the payments to the one who lent the money (mortgagee) the mortgagee can have the property taken away from the mort­gagor, sold and pay himself what he is owed

4. Sales Contracts - The vast majority of automobiles sold in the United States are sold on the time payment plan. The purchaser does not pay cash. In most cases he trades in his present car as a down payment and the balance is financed over a period of months, sometimes as long as four years or even longer. The alterna­tive method of payment is, of course, cash, and early in the history of the auto­mobile industry cars were sold only for cash

5. Promissory Notes - A promissory note is a promise by the borrower to repay the lender on a specific date or dates, usually with interest. In my experience there have been more worthless notes than good ones. Strange as it may seem, the worst promissory notes have come from friends, and the closer the friend the worse the note.

6. Investment Trusts - A highly intriguing table was used for advertising purposes by a real estate syndication firm a short time ago. This is the table:

ANNUAL RETURN ON $10,000 INVESTED IN VARIOUS WAYS

* Married and filing joint tax return
f Disregarding 4% dividend credit or $50 exclusion
° Based on average 11% distribution, half of which is tax-deductible.

7. Foreign Loans - Jl he united states through its corporations and individuals has invested over $30,000,000,000 throughout the world. The total figure in 1959 was $29,735,000,000 and the distribution of these corporate and private invest­ments was as follows:

8. Loan Associations - Buildings and Loan associations isured by the government pay up to 4.6% return, sometimes more if the savings are left in the association for a period of time. This rate is about .6 of one per cent higher than that of the highest rate savings banks in the country, and the building and loan associations provide comparable safety and liquidity.

9. Bank Deposits - Bank time deposits (Certificates of deposits) are some of the highest yielding government guaranteed investments available today. In gen­eral there are three types of bank deposits: (1) checking accounts, (2) savings accounts and (3) time deposits. All of these accounts have equal standing as obligations of the bank, and almost all (96%) of them are insured up to $10,000 by the Federal Deposit Insurance Corporation.

10. Short Term Notes - One of the least known investments as far as the general public is concerned is the deposit in a finance company or a short-term note of a finance company. In light of the lack of general knowledge of finance company notes and deposits it is surprising that there is the large volume of such obligations outstanding.

11. Stock Market - More books and articles have been written on the stock market than on perhaps any other business subject in the world. Most of these have as their purpose instructing the reader on exactly how he can invest to make a sizeable amount of money, and if he really applies himself, how he can become rich in either three or five years.

12. Mutual Funds - The trouble with the stock market is the fact that some stocks go down—quality stocks, too—and it is a devastating experience to pick out so-called "blue chips" such as U.S. Steel, General Motors and Standard Oil of New Jersey only to find after you have held them for a time that they have sagged in price. If they have not sagged they may just have held their own or even increased slightly, but when you, the investor, have sold, the buying commission plus the selling commission plus taxes have resulted in a net loss to you.

13. Insurance - If we go beyond the point of death in our consideration of securing a return on investment, and we will shortly see that we must do this unless we care not at all what becomes of our money once we are dead, there is no invest­ment as good as insurance. This is so because a person can purchase $10,000 worth of life insurance (or any amount) pay just one premium of $58 on the $10,000 policy and then drop dead with the result that the insurance company will pay $10,000. There is no other investment in the world that compares in yield with this.

14. Judging Credits - Perhaps the necessity for making a thorough check before investing any money and the immense difficulty of making this thorough check can best be illustrated by three situations. Originally I had intended to entitle this chapter "Crooks I have Known/' but I thought such a title a little harsh and I retitled it "Three Examples of Somewhat Doubtful Credits;" but in order to fit the highly interesting stories into what is meant to be a primer on investment I finally decided to use the academic title "Judging Credits and Making Collec­tions.

15. Balanced Investments - What a person invests in depends on his own criteria for invsestments. 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.

THE END