One of the real tragedies of human life is the loss of money that has been saved by constant care in the use of one's resources, by deprivation and even by privation. To go without this or that much-desired pleasure or luxury for years, in order to have a little stored away against old age, and then to see it all swept away in a moment, not only discourages one with saving but even with life.
It is because putting money in banks or investing in some other way has so often resulted in total loss that the temptation of the small saver, ignorant of the way to choose a safe form of storage under the supervision of some one else, is to hoard the actual cash in an old stocking, a discarded teapot, a hole under a loose board in the floor, in the mattress or in some other of the traditional places for this purpose. The double disadvantage of this method is the loss of interest and the danger of loss by fire or thieves. Thieves, to be sure, work in equally effective ways to steal the money when it is invested, but there are still ways to keep the money much more safely than is possible to the individual.
Cash can of course be kept in a safety deposit box, but then the "money is not working." This is a loss not only to the individual (of interest) but to the community, since money is needed as capital, to develop agriculture, industry and commerce.
The two unquestionably safe investments are savings banks and government bonds (nation, state or city). But even here there are warnings to give. The bank should be one that is under state supervision. Many private banks have conducted their transactions with scrupulous honesty and excellent judgment, proving as safe as any state or national bank. On the other hand, the sum is appalling of the losses suffered by those who trusted their money to some individual banker, well-known in the community and fully trusted by every one. A state or a national bank may, in the picturesque phrase used to express failure, close its doors, but this is becoming increasingly more rare, as the government watches more closely to prevent such a catastrophe. A savings bank is limited by law in the amount it may receive from one depositor. $3,000 is a common limit. But the person or the family who has nothing in the world to fall back on but that amount would do well to divide even that sum among three or four banks, to lessen the risk of possible loss.
The interest on savings bank deposits is rarely more than 4%, but there are few communities where there is no bank available that pays as much as this. If there is no savings bank at all in the town, or one paying only 3%, it is always possible to open an account in a bank in another town or city, depositing by money order or check. It is harder to withdraw money immediately in case of emergency, but that is not always a disadvantage. And there is always some one in the town who will lend money needed in this way, when it can be got from the bank in a few days.
Except in the few cases of unstable government, the bonds of a nation, a county, or a municipality are secure as far as loss from default goes, but unless they are registered - that is, appear on a government register as the property of the individual - they are negotiable, which means that they are easily converted into cash by the person who steals them. They must therefore be kept in a safety deposit box for security. If they are destroyed by fire and are registered, duplicates can be obtained, but if not registered and lost or stolen, there is seldom any redress. When such a loss occurs, however, the loser should go at once to the local banker or lawyer to see whether he can hope to recover anything. The governmental body issuing the bonds does not always provide for registration.
Until recent years government bonds have been considered an investment that was safe, to be sure, but not a profitable one as far as interest goes. Usually this was no more than the 4% of the savings bank, and often it was less. But since the European war has forced most of the nations of the world to huge debts, the rate of interest has risen, and many bonds of European countries or cities are available that bear a large interest on their face - as high as 8% - and which actually bring higher interest because they are sold below par; that is a $100 bond costs less than $100. The income from such bonds is not tax exempt, but any banker will be able to give a depositor the figures of real return on one bond as compared with the other. The securities of any stable government are literally secure, since the honor and credit of the government are back of them. To many investment in foreign bonds seems forbiddingly complicated, because in cashing each coupon one must fill out a form for the U. S. Government, but any ordinarily intelligent person can soon learn to do this correctly, and the small amount of time involved can be counted as money-earning if the investment brings a higher interest than those with less troublesome ways of collecting the money.
The interest on bonds is collected by cutting off the little strip of paper attached to the bond that is called a coupon. The date at which this may be turned into money is printed plainly on the coupon. The owner should cash the coupon as soon as possible after it is due, in order to have the full use of his money. When the family or the individual has a number of such bonds, with interest falling due at different dates, there should be a list on a card showing date due, type of bond, amount to be collected. This will call attention to the time of collection, which is also the time of the receipt of income from this source. This card is kept in the Accounts file.
The full list of the family investments is made in general on the Assets card, but all bonds or other securities bearing serial numbers should be listed on a special card, giving the name of bond, rate of interest, amount and serial number. It is highly advisable to have a duplicate of this list kept outside the home in a safe place. If no other is available, use the home of a trusted relative or friend, asking him to put the sealed envelope with the record, plainly marked outside "Property of John M. Jones, deposited with L. P. Green and to be returned by him on demand to John M. Jones or his heirs," and the date. Then in case of destruction of the original list by fire, water or other form of loss, the second is available. All this may seem ridiculously detailed, but when one has money one has also care. It is the price of keeping it.