New-York tribune., 1922-02-12
Increasing Yield

Quest ION friend Of min, residing In a
small Ohio city. TO whom ,nonlioncd tho
'N'"M"u' inl"rratloO on investments given
by The Tribune. requests mo 10 ask vour
comment and advice ON the socurities and
deposits enumerated holow. with a vio,y
T." '.n,, n'%nins rh"nGea IN accordancc with
kotahillty and higher yich t;roun E,
ln't.d states government and city bonds
:" a.; p"ush' at par; second Liberty con
v"r'thc f's, third Liberty Az, 3 fourth
.hh'rdy rs. : Federal Farm Loan 81.
le&2 81 New York city 4,.s. 1oss,'s7
olty OF Copenhagen 5iea, 1914. Group 2
Savings hanks) \ total amount of $40. 900
in various savings banks yielding per
cent. Group dndustrials and railroads
Hach BOND 81 900 denonination>: one At
eo'I bond IS. Portland Hallway, lAgnt
:. a3W"r hysf mortrsso COLO bond IS, .
anI,@drhqrouFn rn,d Eapld Transit first morris eaFc
Light first lien hs, sloss sheffield steel
and Iron gold note ds. due 1929. n aharos
preferred stock Standard Gas aud Elcc-
ric. $50 par value The above list appears
I" me as ultra conservative and can Ger
t%inly b" changed with great advantages to
number Of Lihcrtys and Federal Farm
nonds ,e'a1 ,orn solid and broad basis Of tho
hanks deposits can bo invested in sccuri-
,,." Wedding to per cont. What
chanses would you propose az to Group -
- 1t advisable to buy Nigh grade bonds
at premium? My brother thinks an
individual should not do So, but Should
leave that to big concerns which can
easily absorb tho premiums while for the
Individual investor tho premium ia =; loss:
at the same trne a great many high grade
ity at a discount Tho average yiold Of
The total list is at present about 81 700
II seems that this amount could be in
observing at tho same time your princi pies
9f ', safety, diversity and 'nerkctabillty.
case do not hesitate to criticize ana to
n ir
widower. fifty years old. in good health.
worked hard al his lfc. but the prevailing
business depression is forcing him TO de
pend nearly ;tltogethor on the yield Of the
investments In queation.--A S.
Answer-Your reasoning in regard
to the farm loan and municipal bonds
is correct. we think, and all but 81 900
or the $4,000 in the savings banks
might well be invested in high grade
Securitles yielding about per cent.
Not many months ago you could have
obtained per cent. But it might pay
your friend, at The age Of fifty, to buy
an annuity in life insurance COM
pany. In this way he would get the
highest degree of safety with high
yield, but. of course, could not leave
the 10000 to his heirs. The selection
That has been made for Group 3 is not
particularly good ono in our opinion
We think your friend might be wise to
hold the lnterhorough Rapid Transit
os, although in so doing he would be
engaging in speculation The Atlanta
& Charlotte Air Line 5s, due 1914, are
high grade investment. Stock Of the
Standard Gas and Electric Company is
not suitable, and Central Arkansas
Railway and Light first 5s are not OF
the high grade that under the circum-
stances should form part OF Group g..
Portland Railway Light and Power is
a good investment, but is not quite in
the grade Of those we suggest. Your
friend is not particularly interested in
the amount that is left to his heirs. It
would seem obvious, therefore, that he
should buy premium, high coupon rate
bonds rather than discount low coupon
rate bonds. For instance if he buys 4
Northwestern Bell Telephone Z per
cont bond, due 1911, he will receive
$40 year income, and if he lives to be
seventy. although the principal he gets
back will be less by the amount of the
premium about $80-this will be a
subtraction ircm his heirs, rather than
from him, since he can rcinvest his
money in premium bonds. This reason
ing applies with greater force, of
course, the longer the term of the bond.
In addition to Northwestern Bell Tclc-
phonc, we suggest Chicago Union
Station 61Ss, due 1868, recently selling
at 1895; P. LoriIlard debenture rs, due
1914. recently selling at 115; Canadian
Northern debenturc 61as, due 1916,
guaranteed principal and interest bv
the Canadian government, recently sell
ing at 40, and Pacific Gas and Electric
G per cent non-callable, series B bonds,
due 1941, recently offered at 9915. Also
American Tobacco preferred stock, Ma
tional Biscuit preferred, United States
Steel preferred, American Locomotive
preferred, Corn Products preferred and
American Car and Foundry preferred.