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Getting Rich in a Hurry

These facts simply show that the people have millions to give to unscrupulous promo ters, and that they do give them because they do not stop to consider the need of safeguard ing principal. Now, the average earner, or salaried man, cannot always determine the value of an investment opportunity. He is without experience in the matter, and the con ditions are so many and so complex that he cannot master them. His obvious duty then is to get information from the most reputable sources. Bankers of this high order are al ways willing to advise a possible client, even if he be the purchaser of only a small amount of securities.

The oft quoted instances of great estates increasing in value seem impressive when the original amount of invested money is com pared with its present value. The Astor estate to-day is worth over one hundred mil lions, because one of the principal factors in its history is a long period of investment ac cretion. The Astor estate has not been made over night. The foundations of it were laid in the early part of the last century. Discre tion and Time are the great money makers.

Another phase of the get-rich-quick experi ence is seldom considered. Here is a concrete instance. In 1902, a man invested ten thou sand dollars in a mining proposition. After a brief and stormy existence the company went into the hands of a receiver, and all the stockholders lost the full amount of stock sub scription. Taking the case of one of them, the man who invested ten thousand dollars, it would seem that this amount represents his total loss. To correct this impression we have only to ask what he would have to-day had be placed that amount in a conservative five per cent investment, say a bond. In ten years his ten thousand dollars would have earned him in interest, five thousand dollars; and in interest on interest, at five per cent, and not compounded, one thousand, three hun dred and seventy-five dollars, making his total sixteen thousand, three hundred and seventy five dollars. Now, the value of this sum at five per cent, is eight hundred and eighteen dollars and seventy-five cents annually. We may appreciate a little more clearly the full extent of his loss from the following. It consists of four items ; But! He has also lost the income on this total for all years to come. In other words, it is now costing him annually eight hun dred and eighteen dollars and seventy-five cents for having been unwise ten years ago.

Mines and certain other investments seem to offer opportunities for remarkable returns. The returns are, in truth, often very remark able. But they are certainly not very desir able.

Hence when a man comes to you with an enticing proposition, one that will double and treble your money, do not sign on the dotted line. Go to a banker of integrity and buy a security that can only double in cash value to you by means of five per cent interest for twenty years or so.

Who, then, may speculate? t. Not the man whose current expenses are even occasionally in excess of his income.

His financial boat is approaching the falls of a financial Niagara.

2. Not the man whose current expenses absorb his entire income—crumbs, crusts, and all. His financial boat is slowly moving out to sea.

3. Not the man who has but a small margin over and above his current expenses. His business is to batten down the hatches and keep the cargo safe. He must carry ample life preservers in the form of insurance in order to protect his passengers ; that is, his wife and children.

4. Here is the man who may speculate : The one who can (and does) pay all cur rent expenses ; whose family is abundantly safeguarded by the most conserva tive form of protection; who still has over and above these requirements a surplus that he can cast into the sea without punching holes in the bottom of the boat to do it.

Once the majority of American families (and there are about fifteen millions of them) establish themselves on this basis there will be fewer panics and no more hard times. Let us look at the matter in this way :.

a. Current expenses.

Gross income b. Protection.

c. Surplus.

Get current expenses down to a reasonable basis.

Pay for protection as a current expense.

Then your surplus—if you have one—may win you a fortune when stocks are sagging and hopes are high.

"There is an idea among investors, espe cially those residing at a distance from New York, that it is an easy matter to pick up a good bond yielding returns of from 5 to 6 per cent. It is well known, of course, that the strictly high grade issues of the best rail roads in this country are selling on a basis very dose to 4%, and that the farther one gets away from this the greater the propor tionate risk.

"It should not be inferred from this state ment, however, that income cannot be obtained without jeopardizing one's principal, as there are a large number of issues dealt in on the New York Stock Exchange which yield approximately on the investment and which at the same time are safe for all practical purposes : in fact, one can get 5%, or even as high as 5Y2%, and still come within the limit of reasonable safety.

"To be sure, investments of this character do not embrace what are termed gilt-edged bonds, but when the obligation is that of a very strong company earning and paying large dividends on its capital stock, it will be seen that the risk is not a hazardous one.

"To go beyond is a step in the dark which none but the foolhardy will care to take. It goes without saying that in attempt ing to get 5%%, or even 5%, one should exercise considerable care in making a selec tion and only the obligations of the best com panies should be considered, or else it should be ascertained that the collateral securing the bond is good." * * Henry Clews.

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