National Geographic : 1968 Feb
LET US BE YOUR INVESTMENT INFORMATION CENTER Merrill Lynch answers 5 questions most first-time investors ask about this stock and bond business On an average business day, several thousand Americans venture into the market for the first time. Many are con fused by the language. Stocks, bonds, capital apprecia tion. Just what do they all mean? Five minutes scanning this page will not make you an expert. But it may help you to talk more confidently with your broker. Read on. Then get Merrill Lynch's free 32-page guide with more details on how the market works. "What's the difference between stocks and bonds?" When you buy stock in a com pany, you become a part owner of that company. Example: If you own 10 shares of common stock in a company which has issued 1,000 shares, you own 1% of the company. If your company has earned profits and decides to pay a divi dend, you are entitled to 1% of that dividend. If profits increase, the stock will usually be more attractive and its price may increase. If prof its drop, the price of the stock will probably drop, too. A bond is like an I.O.U. When you hold a bond, you do not own any part of the company. You have simply loaned money to the company. The company promises to pay you back the face amount of your bond, when ever it matures. Plus the stated rate of annual interest. Bonds offer little prospect of growth or "capital appreciation' In contrast, good common stocks offer the possibility of capital ap preciation, and-although there is no guarantee of it-generally provide income, too. "How much will I get from putting my money in stocks?" Merrill Lynch can offer no guar antee that you will get anything at all. Indeed, you may lose money. However, it may comfort you to know that a leading index of prices of stocks listed on the New York Stock Exchange has about doubled in the last ten years. Of course, there's no guarantee the trend will continue, or that any particular stock will perform as well in the future. "Whatmakes stock prices go up and down?" There are a thousand factors that can make a stock go up or down -but they all boil down to one simple fact: the stock market works on supply and demand. If there are more people who want to buy a stock than there are people who want to sell it, the stock will go up. And vice versa. "How much money do I need to start investing?" You can buy some stocks for lit erally pennies a share. Others sell for over $300 a share. Price alone is no indication of the value of a stock as an invest ment. One exception: we con- sider most "penny" stocks to be inordinately risky, and refuse to open accounts for the sole pur pose of buying or selling them. We advise you not to invest unless you have (1) sufficient in come to cover living costs, (2) adequate life insurance, (3) sav ings to meet emergencies. "Justwhat will a broker do for me?" A broker is, essentially, someone authorized to handle your orders for the purchase or sale of securi ties. Most brokers offer customers many other services, too. At Merrill Lynch, we think our most important customer service is providing information. In fact, we spend $5 million a year to col lect, analyze, and distribute it. We'll gladly answer your ques tions on investments. We'll also give you our Research Depart ment's buy/sell suggestions on any of more than 2,000 stocks. Free. Also, if you become one of our customers, we'll be glad to hold your securities in our vault, col lect your dividends or interest, and send you a monthly state ment showing exactly how your account stands. Free. Pick up a free copy of our 32 page booklet, "Questions and An swers about the Stock Market," at your nearest Merrill Lynch office. Included: details of the commissions we charge. Investigate-then invest. MERRILL LYNCH, PIERCE, FENNER & SMITH INC 70 PINE STREET, NEW YORK, N.Y. 10005 Let one of Merrill Lynch's 170 worldwide offices be your Investment Information Center. Just walk in!