EVERYONE would like to have an income large enough to create an estate he could enjoy while he lived and leave to his family when he died. Hundreds of thousands of people can obtain this objective to-day with a smaller expenditure of time and money than has been possible at any period since the end of the Civil War.

In earlier stages of civilization a man’s arms, his jewels, indeed all of his most cherished possessions, were buried with him. We think of this quaint custom as belonging to the dim and distant past, but, astonishing as it may seem, it is still a common practice, not only among primitive peoples, but even among the most cultivated classes in our own country. In newspaper notices of wills that have been probated it is almost an everyday occurrence to read that men who have led successful lives have left extremely small estates. Their brains, their abilities, their business acumen, have been buried with them, and, with these things representing their only capital, little remains for their descendants.

Such improvidence should be an object lesson applicable with particular force at the present moment. Although the current depression has depleted some estates, it has provided an unprecedented opportunity for the building up of others. A moderate sum of money carefully invested in the present market is likely to yield a handsome income with a minimum danger of loss. In this there is no mystery, no gambling, no trick. It is simply a matter of taking advantage of an exceptionally favorable situation. It is a fact beyond reasonable doubt that sound stocks in companies whose future is assured, so far as anything human can be assured, are now selling to yield over 10 per cent on the money invested.

Of course it will not do to pick stocks at random. One must choose industries which produce commodities that are sure to enjoy a continuous demand. For example, 125,000,000 Americans have formed the habit of eating three times a day. They are not likely to discard the habit, even though their diet may change slightly from time to time. Again, no level-headed person believes that the people of the United States will suddenly stop riding in motor cars. It is not likely that steel will soon be supplanted to any wide extent as a material of universal use. It is not in the realm of probability that human beings will cease wanting clothes, oil, transportation, or shelter. The same may be said of many other commodities.

SOMETHING more is necessary, however, even after one has isolated the assured industries. There are some corporations in all of these industries that have earned and continued to pay their dividends despite hard times. If they have been able to do this during the depression, there is reason to believe that they will make larger profits and perhaps pay larger dividends when prosperity returns.

The procedure for the canny investor who wants to take advantage of these conditions is to use what cash he has available beyond immediate needs, buy outright stocks yielding high interest returns in a selected company of an assured industry, and put them away. Right then he has created an estate. Even if one has only a small sum to invest, the advantages are relatively just as great for the small investor as for the large.

LET US see how it works. Take, for example, a stock like General Motors. At the moment this is written General Motors is selling around $23 a share. The stock pays $3.00 a share in dividends annually. This is a yield of more than 13 per cent. Suppose the investor has $40,000 and buys 2000 shares of the stock. This would bring him an annual income of $6000. In 1929, when this stock was quoted at 91¾, one would have had to invest $183,500 to get the same annual return.

This comparison is enough to give us one measure of the favorable situation which now exists; but this is not all. The depression will not last forever. As better times return, the prices of sound stocks will advance. During a period of ordinary prosperity General Motors should be quoted above 75, according to the method of evaluation commonly used in the financial districts. If the investor who now buys 2000 shares of the stock for $46,000 sits quiet until that readjustment takes place, he will go on drawing $6000 a year in dividends and eventually will find himself the owner of an estate having an approximate value of $150,000.

OF course it goes without saying that I picked General Motors stock to illustrate my point without the slightest intention of recommending it or giving a ’tip’ about it. I have simply treated it as a representative stock of the larger American corporations. I might equally well have chosen some other. In fact, there are other stocks in similar or even better positions at the present moment, and some of them, if purchased now, will yield more than 15 per cent on the investment. It is well to bear in mind that the prevailing low prices, which offer such extraordinary opportunities for investment, have been brought about by the general depression and not necessarily by the state of affairs within the industries individually.

Even if the companies selected for investment should reduce their dividends or omit them altogether, this, in all probability, would be just a temporary expedient. And if stock prices should drop still lower the present investor who follows the plan outlined here would be protected, for he will have bought his securities outright and will not have to answer margin calls.

To some extent various forms of insurance (and insurance is a splendid form of investment for certain purposes) may be employed to provide an annual income. At the age of fifty, under an annuity, it requires an investment of about $60,000 or a trifle less to assure the purchaser $5000 a year as long as he lives. A joint annuity for husband and wife for the same amount, payable as long as either lives, costs about $70,000; but these incomes cease at death.

MANY investors, even those of some experience, have a wrong conception of yield. They figure that if a stock pays $5.00 a share and is selling for $100 a share, it is yielding 5 per cent. So far, so good. But if the stock is bought at $50 a share, It then yields them, or pays them interest, not at 5 per cent, but at the rate of 10 per cent. In other words, the yield in dollars does not change as the stock advances in price, but the capital value of the stock increases. This means that the percentage of yield to the capital valuation decreases as the price advances, and if the stock rises very high, it may prove advantageous to sell it and buy a greater number of shares of another stock, even though the yield per share is less, for the total income will be greater.

Anyone who follows the policy outlined above will simply be treading in the footsteps of successful men who time and again have bought sound stocks when they were low, and have finally received tremendous yields on their investments. Thus may substantial estates be created. In all history there has never been a time so opportune as the present for ‘shopping around’ in the investment market. Interest and increment are now going at bargain prices.