Medford mail tribune., December 07, 1958, Image 42

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Through the unique Monthly Investment Plan,
you can buy shares of American industry
for as little as 45 cents a day.
ago. Through it, you can spend as little as $40 a
" month on stock. If that's too much, you can invest
as little as $40 every three months or $13.25 a
month. For each payment, you get enough stock
in the company of your choice to match the money
invested, less commissions. If the stock you're
buying costs $20 a share you get two shares for
each $40 investment. If it costs $30 a share, you
get one and one-third shares for $40.
"It's just like buying gasoline," says one stock
broker. "When you go into a gas station, you often
ask for so many dollars' worth of gasoline. You get
as many gallons even a fraction of a gallon as
you pay for. The same way with MIP. You get as
many shares, or fractions, as you pay for."
You can invest anywhere from $40 to $1,000 in
MIP on each payment. If you wish, you can
start several MIP's at one time. One millionaire,
intrigued by the idea of MIP, started 25 plans at
one time so he could buy 25 different stocks.
Whenever things get tight financially, you can miss
a payment or two without worrying; nobody will
come to get your stock back it's all yours. When
ever you feel like it, you can sell your stock and
get whatever it's worth that day.
Take Henry and Mildred Petersen of Ridgewood,
N J., once selected as representative new MIP
investors by the New York Stock Exchange. They
got into MIP on January 25, 1954 the day the
plan started. They started with a monthly invest
ment of $45 in a railroad. They purchased 15 shares
over the next few years but cashed in 12 shares to
help pay for their new home. They even missed a
few months to make some house payments.
"There are three reasons why we buy stocks
through MIP," says Petersen. "First, it's inexpen
sive. Second, it's flexible you can get in or out
whenever you want. Third, it makes you save
you can invest in amounts easy to put aside."
Through MIP, you can learn that the stock
market isn't so mysterious and that stock brokers
aren't remote figures with a secret knowledge of
high finance. They are businessmen whose profits
depend on giving sound advice to as many in
vestors as they can serve. It's good business for
them when their customers are satisfied.
Last year, an elderly woman got into a $40
Monthly Investment Plan with a broker in Wash
ington, D. C. She gave the impression of one who
was in extremely modest circumstances. On her
second visit, to the astonishment of her stock
broker, she gave him a check for $250,000 to invest.
"I just wanted to see if you'd treat me nicely no
matter how little I had to invest," she said.
Any reputable broker will tell you two things
about buying stock: (1) that buying stock, just like
buying any property, has its risks, and (2) you
should have insurance and a cash reserve in the
bank before starting to buy stock.
Why buy stock then? Because it helps you to
hedge against inflation. The dollar today buys less
Busy trading floor of the N.Y. Stock Exchange.
than half of what it did in 1939 because of inflation
(which is another name for the rising cost of
living). So if you had $1,000 in cash back in 1939
and saved it all these years, you really would have
lost money because that $1,000 will buy less than
half of what it could in 1939. But stocks usually
go up in a period of inflation, thus protecting the
purchasing power of your investment For in
stance, if you had $1,000 in cash in 1939, you'd
need $2,037 today to buy as much as $1,000 did then.
But if you put your $1,000 into stock in 1939, and
if those stocks showed only average gain over the
last 19 years, you'd have stocks worth $3,623 today.
If an investor can afford to take the risks, stocks
can reward him in two ways. First, they can grow
in value; this is usually the most dramatic source
of profit Second, they can pay dividends. Not all
stocks do both or either but your broker can
help you find those best suited to your needs. He'll
have at his fingertips a. list of the 325 companies
which have paid dividends for 25 to 110 years.
(Nine out of every 10 companies listed on the New
York Stock Exchange paid dividends last year.)
Another 531 companies have paid dividends for the
last 10 to 24 years. Your broker will also know how
much these companies have been paying in divi
dends. In 1957, half of them paid more than 6.1
percent roughly double what most savings ac
counts earn in interest.
How do you select stocks? Your broker will help
you but, as Henry Petersen says, "I think you
must have a definite plan in mind." Most young
people in MIP buy "growth stocks" that is, stocks
whose value seems likely to increase in the coming
years because the companies are plowing back a
lot of the profits into research and new product
development. Older persons tend to buy "income
stocks" those paying a high dividend now even
though they may not grow as much in value in
the future.
Of course, there are other methods of selecting
by William Barry Furlong
stock. Richard and Barbara Noack of Webster
Groves, Mo., who are investing $40 a month
through MIP in a publishing house, say, "We
selected the company largely on the basis of in
formation we saw in the financial press." But a
17-year-old boy in Greencastle, Ind., whose father
gave him an MIP plan, picked his company be
cause he liked its television commercials.
The people who buy stocks through MIP are not
much different from you and your neighbors.
Their interests and occupations range over the ,
whole horizon of human activity.
Once people get interested in MIP, their interest
usually grows swiftly. One stock broker says that
his "most interesting and difficult sale" was to a
foreman in the Delco-Remy plant in Anderson,
Ind. The foreman was a skeptic who believed that
the stock market was just another scheme to
"rook the little guy."
After a long conversation, the skeptical foreman
decided to experiment by investing a few of his
surplus dollars through MIP. He started with a
$40-ta-month program. Soon he raised it to $60 a
month. Within a few months, 11 of his co-workers
also opened MIP accounts. Others followed when
General Motors of which Delco-Remy is a di-
vision split its stock. "The foreman was a most
satisfied customer," says the stock broker.
Here are the questions which most people ask
about getting into MIP:
Where can you find a stock broker?
Look first in your own home town for a member
firm of the New York Stock Exchange. There are
2,500 such offices in 600 American cities. Under
"stock brokers" in your classified telephone direc
tory, you can quickly find the names of those in
your town. If there is none, you'll likely find one
listed in the phone book of the nearest large city.
How do you do business with a stock broker?
When you start investing in MIP, you'll probably
.want to drop into his office to size him up, get his
advice. After that, you can make all of your pay
ments by mail, if you wish.
How much does it cost?
You can invest anywhere from $40 to $1,000 a
month or, if you prefer, $40 to $1,000 a quarter
(every three months). There are no membership
fees, starting fees, dues,' assessments, or fines. The
only charge is the broker's commission for buying
and selling your stock. The commission on trans
actions involving $100 or less is 6 percent. On
transactions between $100 and $399, the commis
sion is 2 percent plus $2 (with minimum charge
of $6). On transactions between $400 and $1,000,
the commission is 1 percent plus $6. These are the
standard commissions for all member firms of the
New York Stock Exchange.
However, you can reduce the -commission cost
by investing on a quarterly basis instead of month
ly. Let's say you have your choice of investing
$100 a month or $300 a quarter. The actual invest-
Family Weekly, December 7, 195 7