To begin with there is the elimination of the self-deception involved in the old "in-come" idea. A man buys a 6% bond at par. A year later it is selling, for purposes of this example, at 70. He has received his 6% income, but actually the transaction stands as funds in- vested, $1,000; interest received, $60; market value of princi- pal, only $700; net loss, $240. Against this compare simply holding $1,000 if a safe 6% investment does not seem available at the time, and paying out of principal $60, leaving $940 cash at the end of a year, or a net loss of only $60. Or compare buying into some attractive speculative situation yielding noth- ing but advancing say 50% in a year. The latter would work out as $1,500 market value at the end of the year less $90 paid out in lieu of "income," leaving a net remainder of $1,410.
Submitted July 31, 2022 at 01:01AM by sadsacreggaejunkie https://ift.tt/NFguY70
