In the choice of an investment, as in the choice of a house or a suit of clothes or an automobile or anything else, the primary consideration is suitability. This truth has never been put so well as by Franklin Escher in his book, Practical Investing:

"A six cylinder touring car that can make a hundred miles an hour and climb up the side of a house is all very well, but far less suited to the needs, for instance of a country doctor, than is a little runabout costing perhaps one-fifth as much. Just so, in investment, different securities suit different requirements. What for one man would be an ideal investment might be totally unsuited to another's needs. What are my particular requirements? That, in the investment of any sum of money, is the very first thing to be considered. Only after it has been considered can intelligent selection be made.

"What his particular requirements are, each investor must settle for himself. Is he well along in years, dependent on the income from his investments? In that case, absolute safety of principal is the primary consideration. Is he, on the other hand, engaged in some profitable business which yields him considerably more income than he needs? In that case he can afford to take more of a chance. Is the investment being made for his own account or is he acting as a trustee? Obviously these are considerations to which due weight must be given. Individual circumstances must govern, and what these individual circumstances are, no one can tell better than the investor himself. Determining one's investment requirements is not a matter of finance at all, but of plain every-day common sense.

"There is nothing hit or miss about it. The country doctor can cover his rounds in a big, high-powered touring car that costs him two or three times what it ought to run, and the successful business man can invest his surplus in three per cent. government bonds at par, but in both cases there is a really shocking degree of waste."

Remember that most legitimate securities, like most human beings have some good qualities. The vital thing to know is what good qualities you need. Here are practically all of them:

Safety.

High income.

Chance for a rise in price.

Stability, that is, minimum fluctuation.

Ready convertibility, that is, easy to sell.

The investor who is almost certain to keep his bond until it is paid off is foolish to buy-one with a very active market because for the same amount he can get one just as safe which pays a higher income. A person who buys for income only will have to pay more for a security which has a chance for a rise in price than for an equally high income return on something which will not rise in price.

Do you need quick convertibility into cash, safety and the chance of a big appreciation in price, all combined? Then be prepared to pay well for such a combination.

Or will safety and a fair income be enough? Then you won't have to pay so much. You can buy far cheaper.

Know what you want!

There are many experts who regard ready marketability next to safety itself, who would disagree with me in placing high income as the second great essential of a desirable investment. Certainly it is in order to emphasize the fact that if you ever expect to sell your stock or bond, do not buy until you have discovered whether you can sell it. Many persons purchase bonds merely for the interest return with no intention of selling again. But the necessity may arise and you must find out beforehand whether you can sell at all if the day ever comes. Before you buy, ask your banker how much he will lend on it. That is a sure test, an acid test. Too many find, all too late, that they are in possession of securities for which there is no market, which no bank will accept as collateral, and which the promoter who sold them refuses or is unable to redeem.

Mr. William R. Britton, a bond authority, asks this pointed question:

"Would you lend any individual your money for, say, fifty years? Would you take the chances of death, default, disaster, and disease? Never. Then never buy an unmarketable bond. Conditions may change - they always do - in fifty years. Your long-term bond is a long-term contract between yourself and the issuing corporation, and can be broken in only two ways: default by the corporation, and sale by you to another person. This is marketability, and make sure there always will be numerous persons willing to buy your bond without great sacrifice. In fact, ascertain the probability of marketability of a bond before buying, or even investigating."

But there are excessive degrees of ready marketability, just as there are excessive degrees of safety. Why should the individual have a bond or stock which is quoted every minute on the stock ticker? It may be necessary for the bank or insurance company, but not for you and me.