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. The average pretax in­come of all families was $5520 in 1955 as compared with $4120 in 1946. Apparently there had been a definite re-distribution of income into higher brack­ets, and this was accompanied by an improvement in living standards and a larger market for goods and services. With slightly over six percent of the world's population, the United States produces and consumes more than one-third of the world's goods and services.

It is quite obvious that the new income align­ment places somewhat more than the usual amount of surplus funds in the hands of family units. What is to be done with such funds? Increase in expendi­tures for recreation is well known; but at the same time banks, insurance agents, real estate brokers, stock brokers and investment counsels agree that there has been a new surge of interest in investment in general, whether this be in the purchase of a home and life insurance, or stocks, bonds, and an­nuities. Part of such interest, without doubt, has stemmed from recent inflationary trends. Part of it is due to the increased interest in capital gains. In addition, the longest bull market in history wit­nessed a truly spectacular performance in the be­havior of the market itself.

Mr. John Q. Public may be anyone of the people mentioned above. He has heard much about in­vestment, but is ill at ease because his knowledge is fragmentary and inadequate. He realizes the need of sound advice and a better background. Being a prospective investor of relatively modest means, he hesitates to approach those who obviously may wel­come his patronage. Unfortunately, little attempt has been made to reach this customer, who may have as little as $250 or $500 to invest.

This book has been written with the purpose of providing the necessary elementary or background knowledge for the investor who wants to learn more about stock and bond investment and its relation­ship to estate and retirement planning. Every ef­fort has been made to avoid intricate economics, difficult mathematics and undue technicalities. Simplicity has been the watchword, and repetition, where employed, has been deliberate because of the need of driving home fundamentals. The reader is made aware of the need for the accumulation of funds; following this he is shown the various chan­nels into which such funds may be placed and the investment objectives which may thus be realized. An honest attempt has been made to show that any­one may participate with expectation of reasonable success. The question of retirement is also treated in an introductory manner.

Over half of American families own or are pur­chasing their homes; over sixty percent of the pop­ulation maintain life insurance; over 40 million people have invested in government through the purchase of United States Savings Bonds; and over 121/2 million Americans share in American business via ownership of bonds and common stocks. In­cluded here are people of both sexes, in all walks of life and in all parts of the nation.

This book is addressed to those who have faith in the future of their country and are seeking a better understanding of the complexities of present day finance so that they may lay a solid foundation upon which to erect a lasting financial structure. They can be confident that financial success may be assured with careful planning and self-education. The pages which follow are a step in that direction.

My sincere thanks are hereby extended to my col-legues for useful suggestions: Leonard Ascher, Da­vid Blakeslee, Franklin Sheehan, Jack Wilson. They are also given to the following organizations for the use of printed material: Institute of Life Insurance; Teachers Insurance and Annuity Association; the New York Stock Exchange; Merrill Lynch, Pierce, Fenner and Smith.

Carlos S. Mundt

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