The Glorious Past of Mutual Funds
If you talk about investment options, one popular suggestion that will always be around is mutual funds. Mutual funds are very popular today because it allows the biggest return of investment if managed properly. Unlike certificates of deposit and money market accounts which offer ridiculously low interest rates, a mutual fund account puts the best interest of investors first and works to get maximum gains for them.
Buying mutual funds is one investment opportunity that a new investor can take part of. This goes with traditional investment options like certificate of deposits and money market accounts, where no critical decision-making is to be made by the investor. True, trading stocks, bonds, and securities are great investment options but it takes time to learn the works of the trade. Investing in mutual funds is perfect for a beginner who wants a feel of things first before investing a huge amount of money. One advantage of mutual funds is that the pooled capital from investors is spread among different investment vehicles thereby minimizing risks.
In order to understand mutual funds better, we need to take a brief look at its past and see its development throughout the years. Historians are divided as to the real beginnings of the mutual fund concept. Some believe that it was King William I who came up with the idea when he launched his closed-end investment companies in the Netherlands in 1822. Other historians though believed that it was a Dutch merchant named Adriaan van Ketwich who came up with the idea in 1774.
Nevertheless, the beginnings were soon forgotten as the idea reached Great Britain and France and became an instant hit. It was only in the 1890's that the United States caught on with the idea of mutual funds. The mutual funds of the past are so much different from what we have today. It was only with the establishment of the Alexander Fund in Pennsylvania that modern mutual funds came to be. In the years following the establishment of the Alexander Fund, modifications were made to improve the investment opportunity with the ability to do withdrawals on request and semi-annual issues.
In 1924, the Massachusetts Investor Trust was established and was the predecessor of the mutual fund we know today. A year after the Trust was created, its assets ballooned to almost $400,000.00 with 200 shareholders. By the year 1928, the shares of the Trust were offered to the public. During the same year, the Wellington Fund was established and was the first of its kind to include stocks and bonds as investment vehicles for their assets. The demand for mutual funds during this year allowed a rise in stock prices which makes 1928 one of the most glorious years in the history of mutual funds.
The next year however saw the worst of the American economy - the 1929 Wall Street Stock Market Crash. Because of this crash, the prices of stocks declined rapidly and the demand for goods lowered quickly which led to the Great Depression. Yet something positive became of this downside - the government finally took notice of the mutual fund industry and established laws to protect investors.
Under the governing laws, investors soon renewed their trust and started trading again. This was the start of a flourishing mutual fund industry. From then on, the industry continued to be profitable and attracted an increasing number of investors each year. But more is yet to come.
Today, buying shares in a mutual fund is a sound investment for anyone, beginners and expert alike. Even with its current success, the industry has still a lot to offer to those who patronize it. And the great thing about getting mutual funds is that you can take part of a worldwide profit-bearing phenomenon without risking so much. - 23159
Buying mutual funds is one investment opportunity that a new investor can take part of. This goes with traditional investment options like certificate of deposits and money market accounts, where no critical decision-making is to be made by the investor. True, trading stocks, bonds, and securities are great investment options but it takes time to learn the works of the trade. Investing in mutual funds is perfect for a beginner who wants a feel of things first before investing a huge amount of money. One advantage of mutual funds is that the pooled capital from investors is spread among different investment vehicles thereby minimizing risks.
In order to understand mutual funds better, we need to take a brief look at its past and see its development throughout the years. Historians are divided as to the real beginnings of the mutual fund concept. Some believe that it was King William I who came up with the idea when he launched his closed-end investment companies in the Netherlands in 1822. Other historians though believed that it was a Dutch merchant named Adriaan van Ketwich who came up with the idea in 1774.
Nevertheless, the beginnings were soon forgotten as the idea reached Great Britain and France and became an instant hit. It was only in the 1890's that the United States caught on with the idea of mutual funds. The mutual funds of the past are so much different from what we have today. It was only with the establishment of the Alexander Fund in Pennsylvania that modern mutual funds came to be. In the years following the establishment of the Alexander Fund, modifications were made to improve the investment opportunity with the ability to do withdrawals on request and semi-annual issues.
In 1924, the Massachusetts Investor Trust was established and was the predecessor of the mutual fund we know today. A year after the Trust was created, its assets ballooned to almost $400,000.00 with 200 shareholders. By the year 1928, the shares of the Trust were offered to the public. During the same year, the Wellington Fund was established and was the first of its kind to include stocks and bonds as investment vehicles for their assets. The demand for mutual funds during this year allowed a rise in stock prices which makes 1928 one of the most glorious years in the history of mutual funds.
The next year however saw the worst of the American economy - the 1929 Wall Street Stock Market Crash. Because of this crash, the prices of stocks declined rapidly and the demand for goods lowered quickly which led to the Great Depression. Yet something positive became of this downside - the government finally took notice of the mutual fund industry and established laws to protect investors.
Under the governing laws, investors soon renewed their trust and started trading again. This was the start of a flourishing mutual fund industry. From then on, the industry continued to be profitable and attracted an increasing number of investors each year. But more is yet to come.
Today, buying shares in a mutual fund is a sound investment for anyone, beginners and expert alike. Even with its current success, the industry has still a lot to offer to those who patronize it. And the great thing about getting mutual funds is that you can take part of a worldwide profit-bearing phenomenon without risking so much. - 23159
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posted by X - Men @ 3:16 AM
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