The undertakings in which the public are in- vited to invest their money are so numerous, and the prospects of success so speciously asserted, in good and bad alike, that it is necessary to be extremely cautious in accepting any state- ments of the kind without rigid examination and proof of their being true and genuine. Other- wise the investment or purchase becomes a speculation, and, more than likely, will only end in disaster.
The term "securities" applies both to the concerns in which investments are made and to the deeds and documents which represent the investments. Thus a mortgage or a mortgage deed is a "security." The Government Funds, stocks and shares in all companies, bonds, foreign and otherwise, Corporation Stocks, &c., are all termed "securities." A convertible se- curity is one which may be sold in the open market, there being no restriction upon the persons who may hold it.
We will now endeavour to put before the reader some account of the various "securities" in which the public invest their money accord- ing to individual choice, and which (with the exception of mortgage on real property-land or houses) may be bought and sold in the stock- market through the agency of a banker or broker. Quotations of the market price of these securities may be found in the Stock Exchange list, which is published daily, and can be seen at most bankers' offices. Many of them are also quoted in the daily newspapers.
MORTGAGES.
To invest money upon mortgage is to lend it to a person who has house or landed property, and desires to borrow money at a certain speci- fied rate of interest. The title deeds of the property are deposited with the lender of the money, together with a mortgage deed, which describes, in full detail, the terms which may have been agreed upon.
The interest is usually made payable half- yearly, and in the event of its payment not being kept up, or the lender desiring the return of his money, the principal sum can be called up, the lender giving six months' notice of his intention to do so. If the borrower fails to pay, a process of law has to be instituted, called a foreclosure suit, which, if successful, transfers the absolute ownership of the property into the hands of the lender, so that he can receive the rents as his own, or, if he pleases, sell the property under legal authority. In view of such a contingency the value of the property should considerably exceed the amount of the money advanced, so as not only to cover the principal sum, but also any arrears of interest, together with law costs and expenses. The usual pro- portion of an advance on mortgage is two-thirds of the ascertained value of the property, but there might be circumstances which would war- rant some variation in the proportion.
The mortgage deed should be prepared by the lender's own solicitor, who would see that the property had a good title and use all the pre- cautions necessary in transactions of this kind to guard against fraud and loss; and in many cases a professional valuation of the property would be desirable, as a preliminary, before the advance is entertained at all.
Cases have been known where fraudulent per- sons have borrowed money on mortgages of property conveyed to themselves, but as to which they were trustees only for others. The lenders or mortgagees have, in such cases, no alternative but to give up the deeds and submit to the loss of their money.
Debentures are a form of mortgage applicable to the raising of money by a corporation or joint-stock company.
The company mortgages its property for a certain sum, too large for a single person to advance, so it is divided up into even amounts of, say, £100, the money being secured by de- benture bonds, bearing interest at a fixed rate, and being saleable in the stock markets.