TUE SMALL INVESTOR

Where do we go from Here? .. • . • • Lothbury Unit Trusts

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Edward Du Cann, MP The Best All-Rounder ..

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.. Herbert Ashworth Mortgage Loans

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• • R. I. P. Eden Finance Houses ..

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• • .. I. Mercan

Where do we go from Here

By LOTHBURY DURING last week the Financial Times industrial share index jumped 9.2 points to a new peak of 351.4 over the previous high of 342.9 reached on January 4, 1960, and has now (April 10, 1961) climbed to 354.6. For those students of 'form' in the stock markets this means that the lights are now green for 'oo'—we are it, a bull market, that is to say the upward trend will, with probable. breaks, continue.

There are millions of wage-earners and salaried men and women who, today, for the first time, realise that after salting away a small nest-egg in a safe form of investment, they have surplus savings which they want to invest in industry. How should they go about it?

Mr. Bernard Baruch, the great American authority on investment, writes in his book My Own Story, 'the man or woman with modest savings who is simply looking for a fair return on his or her. savings and who cannot give full time to a study of investments, should get the help of an investment counsel.' Such advice is not available here in a big way as it is in New York, Toronto and Montreal.

I only know of two such organisations, 'Investment Research,' run by Mr. A. E. Ellinger at Cambridge, and 'Investment Intelligence,' run by Mr. E. Myatt in London, both of whom are experienced investment analysts. However, the big banks have not been slow to appreciate the vast potential of investing clients that exists Within their own organisations. Instead of passing on investment inquiries to stockbrokers (who are not always competent to give an unbiased opinion) they are offering their own investment service. Lloyds Bank are leaders in this field, having considerably increased their business. They prefer a minimum portfolio of £5,000 for which the management charge is only £10. The National Commercial Bank of Scotland has given such a service since 1956, but generally in respect of larger sums of money. All banks handling investments for their clients (even if they merely act as a 'post office' between client and broker) share in the broker's commission.

Member brokers of the London and Provincial Stock Exchanges still fail to qualify, by examina- tion or any other yardstick, to advise investors as to the best use of their funds. There is there- fore enormous scope for the top-level investment consultant; it is surprising that there are not more of them—the clients are there.

For those beginners in this exciting investment world there is a first 'must.' Have a deposit in the Post Office Savings Bank, at 21 per cent. (first £15 tax free) or the Trustee Savings Bank, which pays interest at the rate of 31 per cent. to 4/ per cent., where you can cash £50 on demand. Next are the various forms of National Savings. You cannot do better than National Savings Certifi- cates, held for seven years with interest tax-free; the return is equal to £6 17s. per cent. Defence Bonds, with 5 per cent. interest, are repayable after seven years at £103 for every £100, giving a tax-free profit, and, of course, Premium Bonds (payable on demand) are a tax-free, very good, gamble. Prizes range between £25 and £5,000- a better gamble than the pools because you always get your money back.

For those savers who have an income of £1,500 p.a. and upwards there are various ways in which they can take an interest in the stock market. They can borrow money from certain finance houses tc, purchase stocks and shares on margin An ingenious scheme devised by Morice Tozer and Beck (Life and Pensions) Ltd. can be effected through an endowment assurance. A deposit of 25 per .cent. in cash or acceptable securities is paid, when the deposit and the loan, 75 per cent., can be invested in selected securities for a certain period. Outgoings consist of stamp duty, brokerage (except in the case of Unit Trusts), interest on the loan at 6 per cent. and the premium on the endowment assurance—relief from income tax can be claimed. Schemes such as this could prove very profitable (with life assurance protection) over the next ten to fifteen years for the new investor.

In the following pages you will find good advice concerning investment in unit trusts, building societies, hire-purchase finance com- panies and municipal mortgages. Some of you may be intrigued by the idea of joining or form- ing an Investors' Club. If so you should write to Mr. David Moate, the active young president of the National Association of Investment Clubs in London. So many learner investors have gained a great deal of investment knowledge and pleasure from membership of one of these clubs.

So many savers lose some of their hard-earned cash—savings, by not putting it to work. The man who said—yesterday-

My daughter's birthday is today, I II give £100 away!

Methinks on second thoughts 'tis best To lock it in the old oak chest

would today be considered a fool not a saver. In this inflationary age the purchasing power of the £ is depreciating. So you must ensure that your capital and income increase by at least 5 per cent. per annum. Now is the time to Go!

I can conclude by saying that the complex question of investment of savings has in recent years been greatly simplified by the informative financial press. In America there are a larger number of women shareholders than men; in this country I believe that the number is growing fast. Therefore those of you who are investment- minded should take your womenfolk into your confidence. Whatever the Budget has in store for the overtaxed citizen, 1 feel confident that there will be some relief from our financial burden and that the courageous and discerning investor can- not fail, with sound advice, to improve his lot.