t and safety in your savings plan is the first consideration. This ordain immediately limit the number of media into which such funds may be placed. After you have accumulated a sufficient amount then will be the measure to believe whether higher risks are justified. How much should be the goal before further investment with attendant higher risks is attempted? The say cannot be given in the form of an exact amount because your total income and expenditures will have a bearing upon it; but most authorities agree that a "dwell egg" or "rainy day finance" must first be obtained which is the equivalent of at least three months' salary. In other words investment for the person of modest means is a series of steps: the gradual accumulation of surplus cash as a "rainy day" or emergency fund; the accumulation of an additional fund for investment; and the placing of this fund in investments which may entail somewhat higher risks. Mutual Savings Banks These banks are quite different from commercial banks inasmuch as there are no stockholders and the depositors themselves acquire as dividends upon their deposits all funds in excess of the costs of doing business and the amounts transferred to surplus. This form of savings bank has several advantages among which the following are worthy of have in mind: It is a safe place for the deposit of surplus funds. It issues various combinations of life insurance at very low rates. The Federal Deposit Insurance Corporation membership offers $10,000 maximum insurance (as it does for other types of banks) on each deposit account for some of these banks; in three states (Massachusetts. Connecticut. New Hampshire) the banks contribute to a central finance which provides similar protection. Since these banks are express regulated they will be subjected to frequent examination which in turn protects the depositors. Commercial Banks The modern commercial bank with its various departments and services may be considered as applying modern merchandising methods to the banking business. The savings or thrift account as operated by most banks is an excellent depository for surplus funds. The arouse evaluate varies with command business and money conditions but is about 3 per cent at present usually credited semiannually and compounded if not withdrawn. The account is insured up to $10,000 by any bank which is a member of the Federal Deposit Insurance Corporation. Over 90 per cent of show day commercial banks are members of the organization. Many people complain that the evaluate of interest of about 3 per cent is too low. They drop that a high degree of safety ordain always be coupled with a low evaluate of go and that this is a fundamental principle of all investment. Building and Loan Associations These are locally owned privately managed thrift and finance corporations. The savers really become stockholders since they purchase shares in the affiliate with their deposits. Some of these associations even offer installment accounts whereby the depositor may buy shares on the installment intend. Their savings accounts are similar to those of banks but they often pay a higher rate (32 to 42 per cent) because a larger percentage of their loans are invested in long-term home mortgages which carry a higher interest rate. Most of them are state chartered but some are federal chartered and will carry the word "Federal" in their titles. Those which are federal are members of the Federal Savings and give Insurance Corporation which provides an insurance of $10,000 maximum per account per person similar to that in savings banks. Some express charters demand membership in the Federal Home Loan Banking System as come up. The depositor should sight out in all cases; the information is readily available. As in the case of savings banks these institutions are not required to pay out money on demand but usually do so. Any of these institutions are a good displace to start in your investing.
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