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Cedar Rapids Gazette (Newspaper) - September 6, 1974, Cedar Rapids, Iowa g The Cedar Rapids Gazette: Fri.. Sept. 6, IS74 AWNNWWWWWWWV ' Investor's (juide By Sam Shulsky Q — In going through the bond list I noted an AT and T 2«‘V4 percent bond due in 1975 It seems to me that this is a good short-term investment which should result in a IO percent earning. Am I correct? Couldn’t one shop this discount area of the bond market steadily for good short-term income? — A — Your reasoning is okay but the figures aren’t as bright as you paint them. On the day your letter arrived. Telephone 2;*4S. due Oct. I, 1975. were selling at 93 — $930. On Oct. I. 1975. they will be worth IOO ($1,000). A price of 93 means a bond with a 2% percent coupon is offering a current yield of 2 90 percent. In addition, of course, is the seven-point (or $70-per-bond) increase to par over the next 15 morths. Looking at the record books. I find yield to maturity (which includes this built-m capital gain) at 8.14 percent. Not bad — considering that the $70 increase in value included is a long-term capital gain and taxed only as such. But it’s not IO percent. The bond market — as I’ve attempted to point out here many, many times — is about as devoid of emotion as any securities market can be. Example: AT and T has far higher' coupon bonds outstanding: 8.8 percent, 83/4 percent, etc. These, more recently offered, bonds sell around par, offering current yields of 8.7 percent — as this is written. Yield to maturity is roughly the same, So — you have a choice of accepting — as you pointed out — 2.96 percent a year on your money (fully taxable) for 15 months, plus a $70 long-term gain at the end (taxable as long-term gain). Or — you can put your money to work in Telephone at a current taxable 8.7 percent (as against the 8.1 percent yield to maturity you quote). You pays your money and you takes your choice. *    * rn Q — We are in our early 30s, both employed and in a high tax bracket. I plan to retire at age 42 on income of about $7,500 and will seek other employment. Presently, we have $10,000 to invest in a fund to provide more income when we retire. We shy away from stocks and real estate because we don’t want lo gamble with the money. Should we go for high-yield deposits, which would bring more taxable income? A — What you must decide is: 1 — How much will be left to you, net, after paying taxes on. say, a 7.9 percent certificate of deposit? 2 — Would that net figure be more than the 5A*2 percent or so you could receive from a high-grade, tax-exempt bond? lf you go the tax-exempt route, consider that you may want the money back when you retire (and your tax bracket drops) in order to reinvest for higher — even though taxable — income. That would mean now buying municipal bonds coming due in the year you intend to retire. If that means buying a bond at a discount, consider bonds which will give you the built-in capital gain in the first year your income tax bracket drops. Finally — keep in mind that none of the procedures outlined above will help you cope with inflation. To do that you will have to “gamble” with equity investments — not desposits or bonds. Q — Should I switch my E to ll bonds, or cash them in and put the money into 8l£-9 percent high-grade bonds? A — H bonds pay out an average 6 percent over their 10-year maturity. If you cash the Es and pay the tax on the accrued interest will the net proceeds reinvested at yield more than the full amount of the Es invested at ti percent? (Also, ll bond interest is not subject to state or local income taxes.) Mf Shulikv welcomes written due* tionv but he Mill be able to provide antwerp only through the column For information to check on obsolete securities. pieose include a self addressed. stamped envelope Address your requests to So rn Shulsky. care of The (Palette Money Market Funds Pay IO to TI Percent By S>l\ia Porter (First of two articles) NEW YORK - A fantastic $1 billion or even more has been poured by an ever-mounting number of small investors from roast to coast into the socalled money market funds in the last year alone. While mutual funds which invest primarily in stocks have been fading fast, these new cash-haven funds have grown from a standing start a mere year ago to at least 20 separate funds today — and new money market funds are springing up every other week Most of these funds charge no sales or redemption fees — are truly “no load” funds. Most offer buyers rates of return ranging from IO to ll percent and up. Most also are highly liquid, and. sa far at least, safe. What are these funds? Whv have I hey become so popular? Most important, what are their names and where can you find (hem? In these two articles, you'll find the key answers. <). What fund? is a unmet market Sylvia Porter A. This is a mutual fund which pools your money with that of other similar investors in order to buy iii large volume short-term securities in the money market at today’s historically high yields Most of the funds concentrate on: Certificates of indebtedness issued by banks in denominations of $100,Ulm or more and due in 30 days to one year; commercial paper; ti. S. treasury bills; or other shortterm paper of high quality. By yourself, you couldn’t afford to buy in units of $100,000 or so. But by pooling your money with the money of others, the managers of the money market funds can buy the big-denomination units and pass on tin* high yields to you <). Whv have these funds become so popular and active? A The upsurge iii interest rates — reflecting tin* Federal Reserve’s tight credit policy and galloping inflation — has simultaneously depressed stock prices and enhanced the attractiveness of short-term, safe, high-yielding, fixed-in-come securities. Rates on time certificates is sued by savings institutions and banks in small denominations have been kept to a maximum of under 8 percent while rates on ordinary savings accounts have been held to 5Cj to 8 percent. But the rates paid on the big-denomination securities have soared along with the overall interest-rate spiral Interest rates on big-denomtnation certificates of deposit have been ranging between 12 and 14 percent, for instance. The gap indicated above between what the big fellow and the little saver can earn has become embarrassingly wide and the discrimination against the small investor lias to me bordered on the obscene. Through these funds, though, the small investor can get a part of the action Some funds require a minimum investment of as little as $100; $1,000 is an oft-used minimum; $5,(UMI is commonplace This is a far cry from a minimum of $100,000 (J How do these funds differ from slock mutual funds? A In the nature of what they buy and hold — their portfolios The familiar mutual fund invests either entirely in stocks or iii some ratio of stocks to long-term bonds The money market funds usually invest in big-denomination certificates of deposit; commercial paper; U. S. government and federal agency short-term issues. Some funds have turned so conservative they are now buying only I' S. government bills Q. What about capital gains? A. These funds are not designed to create capital gains for investors. They are designed to bring you a high income by pooling and un (‘sting at top interest rates money you customarily would keep by yourself iii a savings account at much lower interest rates (). How much income can I ram? A That will fluctuate from week to week with tin1 ups and downs of interest rates in the gigantic money markets You can follow the trends by keeping track of the current rates on certificates of deposit issued by the major hanks of the nation A new fund, just established by one of the nation’s most prestigious investment counsel firms, anticipates a net yield to investors of around 1111-) to ll percent The ‘‘net'' is after deduction for management fees of 4 percent to I percent and expenses. Next: Where you can find the nioruj^ market funds Takes a Dip lf it s relaxing enough for the President of the United States, then it s relaxing enough for 10-month-old Scott Davis of Yuba City, Calif., who also enjoys a refreshing dip in the pool. Scott is a student in a special swimming class teaching tots as young as seven months to swim. SF Fans Bring More Fantasy To U. S. Capital WASHINGTON (UPI) - The nights were lighted by a full moon when the thunder and lightning of intermittent summer storms weren’t crackling over Washington, a perfect setting for the 32nd World Science Fiction Convention More than 4.(MMI aficionados of “SF” — Sci-Fi is a passe term — gathered here to debate their favorite authors. watch fantasy films, barter books and magazines and parade through the fashionable hotel lobby in freakish costumes Many flaunted photographs from the gone-but-nul-forgot-ten “Star Trek” television show or had their pictures taken arm in arm with actors wearing the lifelike makeup used in the moxie “Planet of the Apes”. Those who loved fantasy of ail kinds, from Walt Disney to “Campirella”, well-rounded vampire who uses her body and mouth to doom evildoers, wert welcome, said convention vice-president Ron Bounds. 29. a Washington electrical engineer. “Purists object to including nonscience literature* under SF’, hut ifs all fantasy.” he said. “We are here to have fun.” Bounds commented on the growing popularity of science fiction among the general public as well as its study in the college classroom. “Over the last 30 years science fiction writers have been handling ethical, moral and behav ioral issues too hot to touch in another context.” hi* said But he pooh poohed those who try to find too much philosphical content in the escapist art form. “Some of these people work to put SF in the same dull, dry. stuffv cubbyhole as other literature.” Hounds said There was heavy trading of SF’ paperbacks, with most collectors’ items going for less than $5 But a few rare volumes brought much more. Current issues of “Monster Times” and “Weird Tales", for example, were stacked high on tables Bounds said that in Hie first' two days of the convention 1.200 new members had signed up An international group with 300 members from other countries. the World Science Faction Convention holds next year's meeting iii Melbourne, Australia LAFF - A - DAY GAZETTE TELEPHONE NUMBERS for Mom Sports, Bookkeeping Genera! Infor motion end Office* Not listed lelow (all Uuulotieti Subscription Dept Men thru Sot Bom to J p rn Sundays Until I? Noon Holidays ll a m to I p rn Wont Ads ,    . Mon thru fn I a m to S p rn Saturday until 12 Noon Display Advertising Sam to S p m Monon Office 398 8211 19* 8331 398 8234 398 8222 J98 8430 ; Set yS*/ Cfi A v HISTOKiCAl! MMU AHLAC 1 si H * - S~ * ' ‘‘It s the spot where the first two automobiles collided.” RENT A NEW PIANO Per Month OO No Cartage or Drayage subject I* allice approval Only All Rent Will Apply lf You Decide To Buy! II ILTBKI NNK IC ’N 116 SECOND STREET SE BUILD A NEW NOME ON YOUR LOT ANY PLAN-ANY SIZE ANY STTU-ANY DfSIGN ANY WH ERI WE Witt BUILD ANY PIAN OUT Of OUR CATALOG OR ANY PIAN Of YOUR OWN FRIE ESTIMATES CHEERFULLY FU RRTS MIO • 30 DAY DELIVERY • GUARANTEED PRICE • HIGHEST QUALITY Fflff COLOR CATALOG Poca Lief Own#r» Lief TY BENNE TY, BUILDER R.R. fir, IOWA PH. 848-4268 U.S. HOMES Ult 2ND AVE. DCS MOINES Sees Failure in Tight Money Policy Bv John ( unnill NEW YORK (AP) - Are those high interest rates holding down business spending” Aren’t they supposed to? The answer to the first question is no, they’re not holding down spending And the answer to the second is yes. they should be discouraging spending if the theory is correct. The Conference Board, an independent research organization supported mainly by business, found in a study just finished that the nation’s I.(MMI largest manufacturers have sharply raised their capital appropriations 39 Percent Increase Between th** first and second quarters of the year, it found, these manufacturers authorized the spending of $18.29 billion, a whopping 39 percent increase. Since appropriations are authorizations to spend money in th** future, the impact of heavy capital spending most likely will bi* felt for manx John Cunniff months to come, when the actual spending will be done While the board said it feels an appropriations peak might have been reached, the substantial increase in spending plans during the April-May-.lune quarter adds another question mark about monetary policy. The avowed intention of the federal reserve board s tight money policy is to discourage spending, thus bringing the economy down to a non inflationary pace. Expand Capacity The most logical explanation for the surge in appropriations is that many ICS. industries believe they must expand their capacity or make their production lines more efficient. The largest jump in appropriations, some 125 percent, was registered by the petroleum industry, with nonferrous metals — non iron, that is — paper and chemicals following in that order One reason for expecting a peak has been reached in appropriations, said the hoard. is that electrical machinery orders are being increasingly affected by troubles in the electric utility industry Utilities are among those industries that have been forced to curtail borrowing. Bond issues have been postponed bv poor markets and expansion plans have been thwarted by numerous factors, including emironmental restraints Nevertheless, a separate survey of large manufacturers, this one also conducted by the Conference Board, suggests that capital spending is likely to remain strong in 1975. It said about IO percent of manufacturers responding to the survey expect their capital spending to rise in 1975, 30 percent expect little change over 1974 levels, and 20 percent anticipate a decline Nearly one-half of those expecting a dip in their capital spending next year — that is. IO percent of all tin* manufacturers surveyed — cite tight credit conditions as a dominant factor. But what about the other 9(1 percent who also were supposed to be feeling a credit pinch” Despite the theory that high money rates discourage spending, much of industry seems to believe that it pays to borrow, even at a prime lending rate that begins at 12 percent and .sometimes reaches an effective rate of more than 15 percent. So far the federal reserve hoard, which makes monetary policy, hasn t explained the inconsistency between theory and practice The explanation, if it comes, should make some theorists squirm in their equations For Better Health No One Has Proved Smelling Salts Have Any Real Value Bv Dr. S.L. \ndelman in putting together a firstaid kit. should I include smelling salts or spirits of ammonia?” a reader writes “I’ve always wondered if they really help a person recover from fainting.” ^ our doubts are shared by many. Years ago. when fainting was in style among young ladies who were trying to prove they were frail and ‘feminine,'' it was common to use pungent smelling salts or ammonia fumes as remedies for fainting, lf the maiden was faking, ihe insult to her sense of smell might have helped her recover, but no one has proved that this particular remedy has any other value Do Something However, no one’s proved that smelling salts don t work and they certainly do no harm T hat s why you may want to loin tin* many people who still include cotton soaked iii aromatic spirits of ammonia in their first-aid kits At least having it on hand satisfies a friend’s need to “do something’’ rather than just stand around waiting for ihe other person to regain consciousness Generally a person will recover from fainting when hi* lies (or falls) down. The force of gravity, which exerts a pull away from the head when the person is standing, helps the blood to flow back to the brain. He may recover even faster if his head is lower than the rest of his body. If you should suddenly begin to feel cmd, dizzy or weak — common symptoms before fainting — you can usually avoid unconsciousness by sitting down and putting your head between your legs to increase blood flow to your head F right The most common type of fainting, called vasodepressor syncope*, occurs when a person is frightened Fright causes his body to automatically increase tin* flow of blood into the muscles — in preparation for flight or some other needed physical action. This in turn causes his blood pressure to become lower in the rest of tin* body, including the brain. The problem corrects itself if the person uses his muscles right away. The muscles then tighten and press on the blood vessels, forcing the blood back into normal circulation lf the muscles aren’t used at this time, the blood flow to the brain may drop below Ihe level needed for consciousness and the person faints. Some fainting may be due to emotional reactions to the sight of blood, or shock at alarming news. However, habitual fainting or frequent feelings that you may faint aren't normal They could be caused by anemia, infections, heart disease, overuse of drugs and complications of diabetes and require medical attention Dr. \nd(‘lmun welcomes letters outlining problems which he may discuss in future Dr. Andelmon columns He regrets, however that he cannot personally answer mail Write to him in care of The Gazette. ON THIS DATE in 1984. dozens were killed in floods in India. WCTU Head Hits Lower Drinking Age CLEVELAND (UPI) - A leader of the Woman’s Christian Temperance Union denounced tlx* trend toward a lower drinking age as “a great tragedy” and said the trend was the result of “the viciousness of the liquor industry.” Mrs. T. Roy .larrett vicepresident of the WCTU, hold mg its 100th annual convention, called lowering the legal drinking age ‘an incentive for young people to drink, and even for younger high school students to take a drink or two with their peers as a means of obtaining acceptance. “The viciousness of the liquor industry which lobbied for this legislation cannot be condoned since it strikes at the nation’s youth to their and the country’s detriment while the industry builds its future economic bridges.'’ Mrs. Jarrett said “The great tragedy is that youngsters acquire a taste for the beverage and too often continue drinking until, in their most productive years, they are victims of a discase which it is difficult to eradicate.” she said She said it was up to government and schools to rid the nation of juvenile alcoholism. “It is time for congress to take heed of the damage such legislation brings upon the nation,” she said. “It is also time that schools nationwide throw aside the socalled health literature,’ much of which is promulgated by the liquor interest to teach children how to drink,’ ” she added “It is time that children and young people be given facts    about    alcoholic beverages, instead of fantasy.” In earlier meetings, WCTU leaders said the group was trying to erase its image of little old teetotaling ladies marching through taverns breaking bottles of liquor. “We’re not like that at all,” said Mrs. M. Allen Swift of West Hartford, Conn , “The press often ridicules us, but we have a dandy program going for the protection of the home and the nation.” Judy Hubbard, 15, of San Jose, Calif., said, ‘‘WCTU is for everybody, not just old ladies. W'hat they’re trying to do is prevent alcohol traffic. They’re just trying to help people out.” To Roport Drag Violation Telephone Michael Dooley 377-8081 4 years makes it Scotch A full right scars (hat makes Spcv Rosa! mellower A full right years that makes Spry Royal tighter When you can afford H year old Spev Royal Scotch, why settle for ans thing less? B» ANO n imam Handy for you! Save on Saturdays at the American Building office of Morris Plan from 9:30 - Noon. Free I-hour parking in the Armstrong Ramp. Our teller will stamp your parking ticket. Stop in tomorrow ! 6%    5s/4% 6% DIAMOND ACCOUNT COMPOUNDED QUARTERLY' Open with lust $*>00 and Keep af least this amount to earn 6 Interest paid daily from ci.iy of investment Just ShO minimum on additions to this account After First Quarter withdrawals allowable during first IO days Of a Calendar Quarter E tier five YIELD IS 6 14 5-3.4% REGULAR ACCOUNT earns daily INSTANT INTEREST' Invest as little as Sh OO This ac count pays you *>'« , interest ♦rom day of investment to day of withdrawal Interesi compounded QUARTERLY Idea! account for fie* (bilify E ftective YIELD is *> 88 ORR "SI I i i TAN Morris Plan/MorAmerica IOO American Budding. Cedar Rapids, Iowa 52401 ;

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