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Foreword - During recent years there have been significant changes in the distribution of family income among the people of the United States. Such changes indi­cate that higher income ranks have been gradually increased. United States Department of Commerce statistics show that in 1946 about half of all family unit incomes were in the $1000-$5000 bracket be­fore taxes; by 1955 about half the family units were in the $4000-$10,000 group.

01. About Investments - Investment is the placing of funds for the pur- pose of getting some income return and/or an increase in the invested principal. Return in the form of interest constitutes a rental for the use of the money and as such has been socially acceptable for thousands of years; indeed, tablets and inscriptions from ancient Egyptian and at a specified rate was a common business transaction even in those days.

02. Financial Plan - The preceding discussions have outlined the characteristics of a number of different channels for investment. Only two of these, life insurance and home ownership, are obviously part of a long-range investment plan. For short-term sav­ings, it might be prudent to place funds in sev­eral different places of deposit such as savings banks and certain of the savings and loan asso­ciations.

03. Bonds + Stocks - A corporation is a peculiar thing. A corpora­tion, at least in the eyes of the law, is actually a legal entity, having been born by virtue of its charter; it has certain rights and privileges which are conferred upon it by the state which issued its charter, which specifies the total capi­talization and the amount of stock and/or bonds which may be issued; should any further amounts be required, then the charter must be amended.

04. Essentials Stocks - We have noted that a corporation is an artificial entity, created by law, and endowed with certain rights and privileges, among which is the right to issue shares of ownership called "common stock." The amount of stock authorized is stated in the corporate charter, and the amount to be issued and outstanding is determined by the board of directors.

05. Common Stock - As we have already seen, the ownership of common stock presents certain advantages and also certain disadvantages. Among the former are ownership in the business, the opportunity to share in the profits, the receipt of dividends, and also a hedge against inflation. Chief among the latter are the fluctuation in price (value), fluctuation in dividends, and the total risks which must be assumed.

06. Investment Companies - An investment company is a cooperative agency, having as its purpose the investment of the con­tributed funds of its members in a diversified portfolio of securities, the administration of which rests entirely with the management. In this manner the investor is able to participate in diversified investment without being under the necessity of making any selections himself and also is able to obtain the managerial supervision which he himself could not provide.

07. Retirement - "Old Pete," as Peter Charles of Pilot Hill was affectionately known, was about to retire from his position as stationmaster in this small west­ern town. He was now sixty-five years of age and had worked for the railroad for thirty-five of those years, so that he was entitled to a pension which, coupled with the fact that his little home was owned outright, would be sufficient for his modest needs.

08. Final Word - The aim of this book has been to examine se­lected media o£ investment and to analyze the advantages and disadvantages o£ each. We have also tried to devise a plan with which the in­vestor o£ limited or modest means will be able to invest now in a way that may result in future benefits. Such benefits may encompass capital gains and/or income (from investment com­panies, savings, bonds, stocks).

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