The foregoing plans, taken as examples of the various methods a man can devise for himself, indicate quite clearly that every one can save systematically and that he can com mence now. The Productive Use of Funds The policy of saving and careful scrutiny of expenditures, however meritorious in itself and capable of practical operation, must not be permitted to destroy a person's financial perspective. Otherwise, he trudges down the dusty highways of business adding dimes and nickels to his store, whereas with perspective he might have amassed a notable fortune. What is the rôle of saving in our scheme of personal finance? “I do not mean to argue—I am not such a fool as to argue that it was by mere thrift that colossal fortunes have been accumulated," says the Earl of Rosebery, in speaking upon the question which has just been raised; "but I am here to argue my profound faith that they were in the commencement founded on thrift and on nothing but thrift, and that when by thrift a small but substantial sum was accumulated, it was so utilized as to amount to these enormous fortunes." The policy of saving constitutes merely the foundation of our scheme of finance, the training school in which the character is to be forged and the language of finance learned. Upon this foundation the business man's conspicuous gains are to be made through the productive use of capital. EXERCISES The attempt to introduce thrift into your affairs must not disregard the fact that its real foundation is earnings and earning power. Question No. 1 in the chart thus is highly significant. Does your showing, in your opinion, justify 20, let us say, as a grade? No. 2 raises the question of what has become of the money you earned. Have you gone through the world sieve-like or do you now have substantial accumulations? Needless to say, the term assets does not refer to money only but rather what you are worth all told. Suppose you have done 80 per cent as well as it appears to you, all things considered, you should; then your grade is 80%x25 or 20. The close connection between thrift and readiness for opportunity has been emphasized in the chapter. How do you rank here, on the basis of 15 for full preparedness? Do you appreciate a dollar for the full time, labor, and "going without" that it should represent? Are you wasteful by habit? Are you wasteful in business management? Do you waste time, your own and subordinates'? Do you waste money? Do you waste material? Do you waste brain effort? Do you use your intellect on the most important things or on smaller matters? These are pretty broad questions. Nevertheless, survey your doings and if perfect check in 15 credits! The last question, No. 6, emphasizes balance, "neither a miser nor a spendthrift be." Should you not get a 10 now, there is a chance to do so later on. COUNTS GRADE 1. When I began working for myself my time was worth $...... a day. After......years it is worth 2. My total assets, the results of are ...... ...... 25 years' work, This entitles me to a grade of 3. I have $...... ready money available for a good opportunity. This entitles me to a grade of 4. Have I a fair appreciation of the time, labor, and sacrifice represented by a dollar? 5. How much "thrift" do I possess in the saving of (a) time wastes, (b) money wastes, (c) labor wastes, (d) material wastes, (e) thought wastes? 6. How near do I come to the happy mean between penuriousness and profuseness? Total Credits Test Chart 19. Chart for Self-Grading on Saving Money CHAPTER XXI THE ART OF INVESTING Money can beget money, and its offspring can beget more, and so on.-BENJAMIN FRANKLIN. The Business Man as an Investor The business man in using his capital productively can either invest in other men's enterprises or finance his own. Let us discuss the investment side first, although it is often less important in practice than financing one's own enterprises. The investor, desiring to make his money work for him, finds such openings as the following available: Each of these classes, again, contain securities of a wide variety. They may be issued by national governments, states, municipalities, railroads, public service corporations, banks, manufacturing and mining concerns, or any other of the countless enterprises seeking funds; in grade they range from the wildcat mining certificates scarcely worth the paper upon which they are printed, to the bonds of the United States Government, a premier security. Qualities of an Ideal Investment The task of selecting from this wide variety the appropriate investment will be simplified if attention is given the qualities upon which investments are to be rated in desirability, viz., safety, income, marketability, appreciation, and suitability. Judged by these standards, the ideal investment would be safe, yield a high rate of income, command a market in which it is readily convertible into cash, preserve a market price free from wide fluctuations, afford good prospects of appreciating in value, and in general be suited to its holder's particular requirements. Needless to say, a security meeting to the one hundred per cent degree all these tests cannot be found, hence in deciding upon the merits of various issues submitted to him for purchase the investor accepts the last test as the most important and rates the other qualities in the order of their value to him personally. According to recent quotations of the New York Stock Exchange a certain copper stock sold at a yield of 13.6 per cent and a railroad bond at 5.1 per cent, an industrial stock paying no dividends sold at $92 per share, and a railroad stock once selling at $255 a share was quoted under $30. Which would be purchased? That depends largely upon who purchased. In other words, personal suitability is too often the important factor in buying securities. Sources of Information as to Investments In order to judge whether or not an offered investment meets his particular needs, the investor should possess sound information. One regrets to say, however, that the investor thus qualified is the exception, and it is also unfortunately true as a rule that the less one has to invest the more difficult it is to secure the full information needed. A man of means has friends who are shrewd judges of investments, he receives no end of expert advice from bankers, bond dealers, and brokers, and he has a full assortment from which to select. A man whose orders are limited cannot so easily secure such attention. Notwithstanding this is the case, certain reliable sources of information are open to every investor and he can, if he will, learn a great deal about what he is purchasing and keep in touch with it after it is purchased. Excellent books are published on the subject and the financial papers will also be found very useful. The experience of investors, both successful and unsuccessful, seems to indicate, when analyzed, certain elementary principles upon which good results depend. These will now be stated. I. Diversifying Investments Andrew Carnegie's advice to "put all your eggs in one basket, then watch that basket," no doubt is sound in so far as it concerns one's specialty; but the business man is not an investment specialist and the division of risk through diversification of purchases is accordingly with him the correct rule of procedure. The accompanying table, prepared with the needs of the business man in view, shows how such diversification may be carried out. The yields on these issues vary from time to time, A BUSINESS MAN'S INVESTMENTS |