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