A BANK deposit, life-insurance protection and a home are usually the first investments to be considered by a young man or woman who would get ahead in business or professional life. As they come first in any well-ordered scheme of personal finance, so they have been spoken of first in this book. But there are many other safe and desirable investments, and in this chapter, the relative advantages of the leading groups will be set forth, not in detail, or in technical language, but with all the incisiveness and practical bearing at the writer's command.

There is only one drawback to a bank deposit made in the usual way - and mark this statement well, for you will probably find as your experience grows that such is true of no other form of investment. It is the low rate of interest return. That may seem like a very great disadvantage, indeed. But there are times when it amounts to nothing. In fact, when the investment is intended only to be temporary it invariably amounts to nothing.

The reasons why bank deposits pay so little are two. First, because the bank is never able to tell for how long it may have command over your money. Perhaps it may be for only a few days or a few weeks. If you lend money on a mortgage or purchase a bond, the person who borrows from you obtains the money for anywhere from one to a hundred years or more. He usually knows just how long he can use it - an advantage for which he is willing to pay a higher interest rate. If you buy stock or real estate, the other person gets your money forever, practically. He does not have to make any provision for its repayment. Therefore, he can afford to promise a still higher return. You yourself can sell to another buyer and in that way get back your money - or at least a part of it - but the medium of investment, the investment itself, does not automatically repay itself like the bank deposit. Obviously, the second reason why the bank deposit pays so little is because, in the case of a checking account, so many other conveniences go with it.

I have emphasized this fact of there being only one great disadvantage to a bank deposit because so many people lose in ill-advised ventures money that would be saved from loss and would earn more in the end if kept in the savings-bank, or even in the commercial bank. And in this connection, I have referred particularly to the bank deposit made in the usual way. There is a form of such investment on which the interest rate is oftentimes as high as on bonds or mortgages; namely, the time certificate of deposit. Such certificates are issued extensively by banks in western and southern communities to attract money to be used for community development. Some are merely the promises of the issuing banks to repay the amounts of the deposits after a specified time. Others are secured by the deposits of securities - usually in the form of local farm or city mortgages. Both kinds are safe and desirable investments, if issued by banks that are carefully managed and properly supervised.

Closely akin to the ordinary savings-bank account, and to the time certificate of deposits, is a form of investment represented by the savings shares issued by building and loan associations which are described in another chapter of this book. It is sufficient to point out here that the usefulness of these associations is not all on the side of those who become members with a view to borrowing money to buy or build homes. Indeed, if they did not afford to the man able to save only by fives and tens a safe means of investing for income, they would fail in their purpose of promoting home ownership. But it is necessary to emphasize that as a rule, these associations or societies offer safety on their savings shares only if they are organized as local mutual or semi-philanthropic institutions rather than as ordinary business corporations. The latter class of associations are frequently referred to as "nationals." They are conducted primarily for the personal profit of small groups of stockholders and officers, and their practise is to lend money in remote places on risks to which they can not give adequate attention. They are not infrequently managed as purely speculative enterprises.

There are many people who would be better off if they employed only these forms of what may be called "indirect" investment. No man or woman ought to undertake to acquire direct ownership of securities without at least some study of the fundamental principles involved in the selection of the right kind at the right time. No matter how small the amount of your surplus funds, you can put as much time and effort as you will into the study of these principles and be sure that none of it is wasted.

A good place to begin a study of the various types of securities is with the mortgage, because that is a basic type. First mortgages, or liens, upon real estate were well recognized investments back in the dim early ages of mankind. But despite its antiquity the real-estate mortgage grows more important every day.

In simple terms a mortgage may be defined as a deed or instrument, conveying property to a creditor as security for a debt, the deed being valueless, provided the debt is paid off as agreed. The two main classes of real-estate mortgages consist of those which are first liens on productive farm or horticultural land, and those which are first liens on improved city property. The latter class in turn consists principally of liens on office buildings, apartment houses and other high-priced city property, greatly improved and highly developed.