| Long term savings plans will often be a very | | | | month or not. This is how the forecast works out: |
| sound investment as we will see in this article. | | | | On January 1, 1961 she invested her first |
| Although Forex can make you much more in a | | | | money-$1,000-and at the end of the first month |
| smaller amount of time - but there is more risk | | | | her interest check on this $1,000 was $10 (1% |
| attached. | | | | per month). She did not spend this income but let |
| Our American economy is a free economy, and it | | | | it stay in the account in order to become capital |
| operates on the principle that if we leave the | | | | and thus increase the earnings base. But at the |
| factors of production alone, without government | | | | end of January she put in her first periodic |
| interference (and by factors of production we | | | | monthly savings-$200, so that at the end of |
| mean land, labor and capital) so long as the game | | | | January her original capital in the account was |
| is played fairly and honestly, those factors will | | | | $1,000, the interest was $10 and the monthly |
| gravitate to their most economic and beneficial | | | | savings were $200-$1,210 in all. The interest on |
| use. This they will do by being attracted to those | | | | this total capital during February was. |
| places in which they are worth the most, this | | | | At the end of the first year she has put in a total |
| worth being reflected in rate of return. The places | | | | of $3,400, but the interest has made this total |
| that need them the most pay the highest return. | | | | investment grow to $3,662. |
| For the American economy to operate, each | | | | In the normal course of her business career her |
| investor must seek the highest return on his | | | | income will go up slightly each year as she |
| capital obtainable consistent with risk. | | | | progresses in her job, but she probably will be |
| This is not only the justifying theory behind rate | | | | able to save no more as these increases take |
| of return. It explains why certain industries need | | | | place because she must pay taxes on her |
| money and can pay a good return | | | | interest, whether she receives it and spends it or |
| The individual usually needs little urging to be | | | | just lets it remain in her account to increase her |
| converted to the doctrine that if he can get 10% | | | | capital. |
| on his money rather than 6% with the same | | | | By January 1, 1980, when she retires from |
| degree of risk he should do that. This article | | | | business at age 63, her capital amounts to |
| attempts to show him the opportunities to place | | | | $108,476 on her total savings of $15,400. Her |
| his money in higher yield investments. But first it | | | | monthly interest check amounts to over $1,000, |
| might be well to explain just how significant the | | | | and this is in addition to her pension from her |
| rate of return on your money is: | | | | pharmacist's job and her husband's pension from |
| A short time ago our very close friends invested | | | | the government |
| $1000 in a promissory note which yields 12% per | | | | Is all this calculation fanciful? It may be, but I |
| year-1% per month payable monthly. | | | | personally many people have had funds invested |
| Both the husband and wife work, the husband in | | | | in this particular company for five years, and the |
| the government and the wife as a pharmacist. It | | | | only thing that hap pens is that the company |
| is their desire that before too long the wife cease | | | | grows, gets sounder and earns more money |
| work and retire permanently. But they are used | | | | each year. Eventually they will not pay 12% per |
| to getting along on two salaries, not just one, and | | | | year in all probability. Then it will be necessary to |
| the retirement of one of the couple will cut the | | | | find another similar investment. |
| family income materially. Since the children are | | | | We might further define the type investment we |
| grown and out on their own they feel that they | | | | are talking about as high yield, fixed dollar |
| can save, after taxes are paid, $200 per month. | | | | obligations. The "obligation" part of the definition |
| This will come out of the wife's income. She has | | | | means that someone or some organization has an |
| not saved this much to date, mainly because | | | | obligation to repay the money invested. |
| there did not seem to be any great motive for | | | | The "fixed dollar" part means that there is an |
| saving, and she seems to like to do a good deal | | | | obligation to repay a fixed number of dollars. While |
| of shopping in the department stores. So a | | | | oil wells, tung groves and citrus groves may be |
| forecast of her savings of $200 a month was | | | | excellent investments and return fine profits, |
| drawn up in order that she might have the facts | | | | there is no obligation on the part of anyone to |
| at hand on which she could base a decision as to | | | | repay any fixed number of dollars. |
| whether she should attempt to save $200 every | | | | |