subject: Securities and Estate Planning [print this page] Securities and Estate Planning Securities and Estate Planning
Securities and Estate Planning
Today there is a strange condition in the securities marketwhich bids the individual investor to exercise extreme cautionin his investment program. Common stocks, once the big money maker, on the whole pay yields considerably lowerthan those realized from corporate bonds and even UnitedStates Treasury notes. In most cases, dividends on commonstocks are less than interest rates currently paid by savingsbanks.
Thus, today's careless investor might find himself in thesame position in a few years as the "careful" investor inGovernment bonds a few years ago finds himself today.In both instances, the investments are low-yield; and if themarket takes a down turn, not only is the yield low, there isalso a shrinkage in the dollar value of the principal. It is notadvisable, therefore, for an investor to draw all of his assetsout of savings banks or other investment media and to rein vest them in common stocks. If an investment program isdesired, it should be carried out on the same planned basisthat has been suggested for both insurance and savings programs.
Learn More About Life Estate Planning
There are three basic rules for an intelligent and prudentinvestment program:
Seekdiversity in investment so that all of the proverbialeggs are not in one basket.
Move ahead on a periodic investment plan so you cantake advantage of "dollar cost averaging" and thereby hedgeagainst market fluctuations which may be too sharp. Underthe principle of dollar cost averaging, an investor pays for thesecurities he is about to purchase at the current market price.Because he makes these purchases periodically, however, somepurchases will be made when the securities are higher in priceand others when they are lower.
When the price is high, itmeans that the value of the shares previously purchased hasincreased in value. Conversely, when the price is low the valueof the shares previously purchased has declined in value, butthe present purchase is then made at a comparative bargainprice.
