Investments in other securities than those of governments may be advisable, but they should never be made without the advice of experts. The banker is perhaps the best, but often one knows and trusts a business man whose advice will be equally valuable. To ask several people of good judgment is better than to ask one. Many people hesitate to ask advice either because they think the matter too small and too personal to bother a busy man about or because they are reluctant to violate secrecy regarding their own affairs. The first reason is not a good one, since it is part of the banker's business to give such advice and it is part of the community service that any business man worth consulting is only too glad to render. The second reason is equally bad. If money is stored as coin or bills in the old teapot, secrecy is certainly advisable, as knowledge of it might lead to loss by theft. But there is nothing in invested money that needs to be concealed. Its existence cannot be concealed from the income tax man without perjury. And the banker regards confidential statements from his clients just as the physician or the lawyer does. The business man who having been consulted in confidence would tell his friends that John Jones had $300 to invest would not be asked for advice many times. Yet either banker or business man may be justified in saying that he is sure that John Jones's credit is good when he is asked about him.
Building and Loan Associations offer excellent opportunities when their management is safeguarded by the state, since they pay good interest and make provision for lending to holders of shares. But there have been serious losses in some associations of this kind, and one should make sure of the standing and security of any in which one invests. Credit Unions with similar privileges exist in some states.
Any security which is a legal investment for a savings bank is of course a safe investment. But one should make sure that the security is so listed.
The name of the owner should never be written on the bond. If this is done in pencil, it is usually possible so to erase it as to conceal the fact that it has been marked, but writing in ink cannot be so erased. A "marked bond" has a lower market value than the same bond unmarked. Where bonds belonging to different members of the family are kept together, it is easy to distinguish ownership by having a list of the serial numbers of the bonds belonging to each. In a safety deposit box it is well to put the bonds belonging to each person in an envelope plainly marked "Property of - owner," with a list of the serial numbers and amounts below.
In buying any kind of bond the possibility of forced sale must be kept in mind. A bond bought at a price that means good interest may bring a lower price still if the owner has to part with it at a given time, and this price may mean that the bond has been a less profitable investment than the savings bank would prove. Every family should have a cash reserve available, ordinarily in the savings bank, before buying the securities that are profitable when one can keep them and not profitable when one must part with them. For a temporary need of cash it is often better to borrow than to sell. Any bank lends on securities to any depositor in whose need and judgment they can feel confidence.
The truth of this last paragraph has been brought home to thousands of Americans and going-to-be-Americans in the last few years. Often at a great sacrifice they subscribed to Liberty Bonds at par - $100 for a $100 bond. They were incited by patriotism, but were told over and over again, with the authority of the government, that they were also profiting themselves. They put all they could scrape together into the bonds, often taking money they had in the savings banks. Then came a period of business depression, of unemployment and of high prices that drove them to sell their bonds to provide the necessities of life for their families. And thousands had to sell when they received only $83 for their $100. That was a stunning loss. To the more ignorant it seemed that they had been cheated by the United States Government. The government is justified in calling the bonds a good investment if and when those bonds can be held by the buyer until maturity. Then, at the date given on the bond, the government will pay the full $100. But it is hard to prove to the one who has had to sell at a sacrifice that the investment was a profitable one. Undoubtedly the experience will discourage many of them from ever purchasing such a "safe" bond again.
Many of these people, if they are not entirely discouraged from investment, will turn to the securities offering a chance of very large profit. If they may lose their savings anyway, why not get good return while they have them? This is another opportunity for that despicable group who make their living by selling to the people eager to get large returns and ignorant as to safe or doubtful financial methods, securities that are or probably will become valueless or at least of small value. The men who make such fraud the business of their lives know about how much money they can hope to get from a given section of the country in a given year. They know how to find the widow left with a life insurance paid in cash, the elderly woman or man who has just sold out a little retail business in order to retire, the inexperienced boy or girl who in the first few years of wage-earning has saved $500 as the basis of a fortune. They will tell you perhaps that these "gulls" all deserve to lose their money because they are fools and greedy. Some one will get it anyway, because they are bound to get a higher return in interest than is possible except by hard work or exceptional luck.
It is true that there are few of us who do not want to get more than we really earn. Some day we may reach the moral height where we are unwilling to take more than a legitimate return for our work or for the work-income that we have stored up in savings. But now we remember the tale of this man or that woman who invested a few hundreds in some world-famous business just at the beginning and without any work or even thought on his or her part now finds the investment worth thousands and bringing in a good income. Great luck. Yes, and a discourager of the toil by which the great mass of mankind must earn their living. The man who puts his money, his intelligence, his ability, his time, his very life into his business fairly earns a large profit: the stockholder who profits by work in which he does not share - profits beyond a reasonable interest on his money - is getting a return for luck, just as the gambler gets his.