Show B A B S 0 N as AUTHENTIC STATEMENT special to THE EXPRESS W babs STATEMENT BABSON GIVES BEST dabson babson park maw mass with the new administration coming into office the wise investor wilt will play safe if J F K X takes his father a 9 advice investors should have nothing to tear fear but if he takes the advice of 0 wild eyed college prof professors mors we may have much to fear importance of security bonds of a company are always safer cater than the stocks of the same company but stocks of some companies are safer than the bonds of other companies hence readers cannot feel safe by just buying either stocks or bonds everything in the world is good andor bad no one rule will apply to all persons or to all casses of investments or real estate it is also wise to consider the relative prices of bonds before you buy them the average price of good bonds has carried to yield between a high of 4 in 1960 and a low near 3 in 1949 1940 this means that bonds were highest priced in 1940 1946 and lowest in 1960 hence this is a good time to buy good bonds although they are a little higher than a year ago there are three different groups of bonds arranged in the order of their safety as follows different kinds of bonds I 1 US government bonds these are mostly held by banks although very safe they do not yield very high interest yet this interest is taxable for individuals the short maturities yield the least while the long maturities yield the most if you want them as a reserve for money buy the short matu maturities but if you want them for income buy the long maturities 2 tax exempt municipal there are two kinds 1 the fixed interest municipals pals issued by cities towns town counties and states I 1 suggest that you avoid bonds of big cities buy the bonds of medium siz ed cities in the interior of tho the united states the capita cities of interior states should be the safest of all and carry a fair yield all these are nontaxable non taxable for federal tax purposes you can also buy 2 non taxable revenue bonds but the interest on these is not guaranteed most turnpike bonds are in this latter class so long as the turnpikes are used sufficient ly the tolls pay the interest but if the tolls are not sufficient full interest is not paid this explains why turn pike revenue bonds yield higher than straight pals 3 corporate mortgage bonds and debentures debenture bonds of corporations are es al I 1 to 60 of different kinds but all are taxable as to interest to readers of this column I 1 recommend the mortgage bonds of public utility companies such as the company to which you pay your light and power bill the sale of electricity is constantly in creasing and though subject to rate regulation these companies have a monopoly they are also freest from union labor interference most industrial bonds should be good provided they are not subordinated to bank loans or other indebtedness income bonds may be good speculations following a drastic reorganization debenture bonds are unsecured a and hence often not suitable for small investors unless accompanied compa compan nied led with attractive conversion privileges tire the el paso natural G gas due in 1977 are a favorite of mine yielding about ah I 1 do not like railroad bonds or bonds of manufacturing companies subject to competition importance of diversification and Pati malinc Pa linc for 62 years my family has been helping investors to conserve their savings and secure reasonably capital gains for 40 years I 1 have been writing this thia weekly column the great lesson which I 1 have beamed is the importance a n c e of diversification hence why not buy some short term government bonds to turn quickly into cash in an emergency plus some public utility mortgage bonds for good income plus some same tax free municipals pals to save income taxes plus a few convertible bonds as a speculation most important of an all train yourself to develop patience the ability to wait for the big market moves in bonds stocks and real estate patience diversification and compound interest are the big necessities for making a fortune |