BUSINESS & INVESTMENTS

ANSWERS TO FINANCIAL QUERIES

November 1 1925
BUSINESS & INVESTMENTS

ANSWERS TO FINANCIAL QUERIES

November 1 1925

ANSWERS TO FINANCIAL QUERIES

Question—What is your opinion of United Bond Company’s seven per cent, first mortgage bonds? Is this safe for a woman to invest her money in? —Mrs. MacN., Woodstock, Ontario.

Answer—As we understand it, the United Bond Company, Limited, of Windsor, Ontario, operates similarly to a Detroit enterprise of a similar nature of which it is said to be an offshoot, although it maintains its separate identity. The company has been operating in Windsor for a comparatively short period. We are informed that the company’s mortgages are placed on a conservative basis. We hesitate, how-ever, to recommend the bond as a woman’s investment for the reason that we invariably prefer to see a woman place her money in thoroughly seasoned securities. Properly speaking, a woman’s investment should consist chiefly of government or municipal bonds. The return may be less but the risk is negligible.

Question—We have $10,100 in 19SS and 193f Victory bonds and own our own home. Our savings in the bonds must be kept in safe securities for that time when there is no working wage coming in. We have no family and carry no insurance. A bond dealer wants us to sell our bonds for Grand Trunk three per cent. 1962 bonds, claiming it would build up a capital quicker and is just as secure, although at a lower rate of interest. Would you advise the change? On November 1, we will hare $500 more to invest. What would, you suggest?—Mrs. Y., Victoria, British Columbia.

Answer—In your case, it seems highly advisable that you continue your sound practice of buying gilt-edged bonds. You can do no better, of course, than to continue building up your supply of Dominion Government bonds, although you may be equally safe if you will buy, for a change, provincial bonds or some of the well recognized municipal bonds; it might bring you the added advantage of fractionally better interest rate, which of course is a consideration. You do not state the price at which the Grand Trunk three per cent. 1962 bonds are offered to you. This would be a factor, of course, for serious consideration, because it would influence your interest returns. If these Grand Trunk bonds are guaranteed by the Government, they are practically the equivalent of government bonds; you would want to make certain that this is the case. Perhaps the recent issue of Dominion of Canada fifteen-year four and a half per cent, bonds, which were issued to Continued on page 11 Continued, from page 8 yield over 4.75 per cent, would better meet your case. You could purchase these without the slightest misgiving; the interest rate, of course, is less than the Victory bonds which you have been carrying, but that is because the general trend of international interest rates is lower at the present time. You would be quite safe in re-investing the $500 which is coming to you, November 1, in Dominion of Canada four and a half per cent, bonds.

Question—The Canada TrustCompany offers four and a half per cent, on savings; is this a reliable company? Do you think the new government loan a better investment? —G. G., Toronto.

Answer—The new Dominion of Canada four and a half per cent, bonds are probably the soundest investment for a small investor which are available to-day. There is, of course, no better security in Canada than federal government bonds. We invariably counsel small investors to put their money into government and municipal bonds until they have built up a sufficient financial foundation which would warrant their embarking upon industrial and public utility securities which offer slightly better interest return. Of course, if you want your money to be immediately available, you can do no better than to put it into one of the chartered banks. Your interest rate is three per cent, and your money is accessible at any time. The Canada Trust Company is a reasonably safe institution with which to place your savings.

Question—I would appreciate your opinion as to the present standing of Atlantic Sugar Refineries, Ltd. Do you think dividends on the common stock will be earned in the future?—W. B. M., Nora Scotia.

Answer—It is generally understood that the directors of Atlantic Sugar Refineries, Ltd., are succeeding measurably in rehabilitating the company’s financial standing. This has, of course, been reflected in the movement of the stock for some time past. While the last annual returns showed profits under those of 1923, there was an improved condition shown in the working capital account. Operations since the first of January are understood to have been of a distinctly profitable nature. While this situation should improve the position for the shareholders, we hesitate to forecast regarding the resumption of dividends on the common stock.

Question—Would you advise an employee of Canadian Niagara Power Co. to buy stock in that company? The person in question has only a few hundred dollars to invest.—Miss B. A. B., St. John, N.B.

Answer — The Canadian Niagara Power Company is a strongly entrenched corporation, the annual report for 1924 showing assets exceeding $84,000,000. The company is most excellently managed, and the stock should be an entirely sound investment. We understand the company has a compensation arrangement with its employees by means of which every employee who has been with the concern for six months or more receives so many shares as “Compensation.” _ This, we presume, is entirely in addition to the salary paid the employee. The stock, as far as we know, is not listed and if holder at any time desired to convert into cash it would probably be necessary to do so through the company’s own treasury.

Question—I have $500 to invest and, like all other investors, want the largest return consistent with security. Would Simpson’s, Ltd., and Mercury Mills bonds be a safe investment? Minister, Ontario.

Answer—Simpson’s Limited 6J4 per cent, bonds are reasonably safe. They were sold by reliable investment houses and are conservatively recommended. Simpson’s is in good shape, under good management and the prospects are favorable for further expansion of the business. Mercury Mills bonds are a reasonably safe industrial investment at an attractive return. There is a certain amount of business risk, of course, with both these securities. Another point which might be considered is that there is a somewhat limited market for issues, particularly of the Mercury Mills type, and this might

be a factor for you to consider, particularly in the event of a desire to realize upon your investment before maturity of the bonds. When buying bonds or stock it is always well to look ahead and determine their prospect of reasonable convertibility.

Question—Kindly tell me if the Vitamine Food Company’s shares are a good investment; the company, I believe, is incorporated in the state of Delaware. —Miss D., Paris, Ontario.

Answer—We have no information on file regarding the Vitamine Food Co. but if, as you say, this concern is incorporated in the state of Delaware, would remind you that it is the invariable practice of our financial department not to advise regarding foreign securities. We prefer to limit ourselves to the Canadian field, where there should be ample opportunity for the investment of your surplus funds.

Question—I have received a foreign exchange bulletin giving particulars regarding government bonds of France, Belgium, Denmark, Japan, Russia, Italy, Finland and Roumania. The bulletin advises that this is an opportunity for a good investment as the rate of exchange is favorable. Please advise if these are a safe investment for one or two thousand dollars.—C. T. P., Niagara Falls, N. Y.

Answer—A great deal of money has been lost in foreign bonds by ill-advised or ignorant investors. Unless you know definitely that the bonds in question are absolutely gilt-edged and guaranteed by the issuing government, these oonds constitute a highly speculative commitment. You would be wiser to adhere to securities of long established enterprises in your own country.

Question-^ have had shares in Southern Alberta Oils, Ltd., for a number of years and would appreciate any information regarding them.—Miss E. K. T., Ontario.

Answer—We can give you no definite news regarding Southern Alberta Oils, Limited. In the main, Alberta oil shares are entirely speculative. As you may be aware the Imperial Oil Company of Canada has been making the most extensive survey of this whole field, and as yet is not prepared to make any definite announcement regarding the future there. Until the Imperial proves its properties in Southern Alberta, it is impossible to say much regarding the prospects of the other concerns. Small investors should be particularly canny of oil shares at best.

Question — Kindly give me your opinion regarding Montreal Finance Corporation. I have been asked to buy some shares but have held off feeling that, I would like to have expert advice before investing, as I can ill afford to be rash with my savings.—W. F., Montreal.

Answer—The Montreal Finance Corporation, Limited, deals in mortgages, purchase and sale agreements, debentures and similar securities. It is specializing in the discounting of mortgages and balances of sale price arising out of the instalment sale of residential property in the city of Montreal. Success in this business is almost wholly dependent upon management. So far as we can determine the management in this case would appear to be satisfactory. The stock is speculative, particularly in your case, where, as you state in your letter, “you can ill afford to be rash with your savings.” We consider it advisable for you to adhere to the practice of purchasing sound bonds, particularly governmental and municipal bonds. These should be the firm foundation for the financial future of all small investors.

Subscribers to MACLEAN’S MAGAZINE desiring advice in regard to Canadian industrial investments, or life insurance problems, will be answered freely. Inquiries should be addressed to the Financial Editor of MACLEAN’S MAGAZINE and a stamped, addressed envelope enclosed.

If you are asking in regard to insurance, please give full details of your own financial and family position, so that definite and individual suggestions can be given.