Although investing is the subject of this book, we start with a few words about saving money, because a man cannot in­vest money until he has saved it—unless he is one of the minority who inherit or marry or borrow or otherwise come into control of what others have saved.

Especially in recent years, an American with a steady job probably has sufficient income so that he can pay es­sential living expenses and also be saving money, if he wants to. His ability to spend less than his income depends more on his mental attitude than on the size of his income. (We do not mean to imply that this problem is limited to males only; in this book the words "man" and "he" in­clude women.) To save, a person must have a motive strong enough to overbalance the pressure to spend all in­come immediately, if not sooner.

Some common reasons for saving are to meet unpredict­able future difficulties, often called "a rainy day"; to pay for a college education for children; to pay for a home; to 'have an income in old age; and at death to leave some­thing for dependents or descendants or other heirs. Among these reasons, provision for old-age income is the one that usually calls for much the largest accumulation of capital, through either a pension system or private saving or both.

Nearly every American, when his earned income reaches a quite modest minimum, gains a right to pension benefits, payable after he reaches a stated age and retires from his paid job. In addition, governmental assistance is available for needy people. This rather new and growing system in the United States is replacing the ancient custom of children taking care of their elderly parents.

But typical pension benefits are much smaller than earned income before retirement, so that for a worker without capital, the arrival of retirement day means a slash in living expenses. And when he dies, his widow must meet another big cut. Also, the pension benefit is usually a fixed dollar amount, so that the pensioner's buying power prob­ably tends to shrink from year to year due to a rise in cost of living. So retirement is rough for him financially, and rougher still for his widow.

A worker, however, can spend all of his earned income before retirement and still expect that he and his wife will always have something to eat and wear, and a place to sleep, probably without going to the county poorhouse. A good many Americans seem willing to rely entirely on pen­sions and assistance from government or someone else to finance their retirement. To the question "Is saving money worthwhile?" their actions show that, aside from compulsory savings for pensions, their answer is "No." If they under­stood the possible results of intelligent investing, some of them might conceivably give a different answer.

Let us turn to the people who have been saving money. Ordinarily a person has nothing to invest until he first has mastered the knack of not spending all his income. He cannot become an actual investor merely by making a New Year's resolu­tion that he will start to save money as soon as he gets his next raise in salary. Of necessity, an investor has al­ready learned to be cautious as to how much money he spends. But it does not follow that he has bothered to learn anything whatever about choosing a place to put his savings.

Aside from paying for a home, the great majority of savers limit themselves to fixed-price types of investment, including life insurance, savings deposits, and savings bonds. In dollars accumulated, such investments may look pass­able; but a saver finds that after many years of effort, in­cluding reinvesting all income from savings, a rise in cost of living has caused his capital to have far less buying power than he had expected. So he may well wonder whether sav­ing was worthwhile.

That such results are accepted by so many people, in­cluding so many professional money managers, is one of the queer things about long-term investing. If the result of saving money is merely that in the distant future a man will be able to use about the same amount of buying power that he puts off using when he first receives the income, then the prospective advantage of substantial saving is so small that even a cautious man might wisely decide to enjoy life now while he can, and to let the future take care of itself.

The great majority of investors own no stock in corpora­tions. People who have moderately been saving money generally are not even aware that stock in top-notch corporations can be bought readily in small installments, at fair prices. Buying such stocks, a man can expect that by saving a dollar today he will have many times that much buying power to spend in the not-too-distant future. With that sort of results, saving becomes distinctly more interesting than when confined to fixed-price investments. The choice of type of investment is more important than the amount saved from salary.

Although learning the essential rules of intelligent in­vesting requires some study, it is not an especially hard or time-consuming job. It is probably easier than becom­ing a passable bridge player, or holding living expenses within the limits of one's income.

A reader who believes a red-blooded American must expect to take risks may look upon long-range planning of saving and investing as a sign of weakness, of excessive caution. But civilization is complex. The principal result of eliminating one sort of risk may be to open new op­portunities for taking chances hi other directions. By the time a man reaches middle age he is likely to be scared of losing his job, for fear he cannot get another one as good. The bigger his job, the farther he might fall. But a man with adequate and reliable savings can do his work as he thinks it should be done, calmly facing the risk of de­motion or discharge. A young man who hopes, in middle and old age, to call his soul his own had better start while still young to learn something about saving money and investing.

To return once more to the question "Is saving money worthwhile?" this book's answer is emphatically "Yes," provided a saver is willing to take time to learn the minimum facts on how to get substantially better results than most investors do.