Mutual Funds - Its Humble Beginnings
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.
The mutual funds of today are very different from the mutual funds our grandfathers invested in. It took several years to add the changes necessary for it to become what it is today. Even historians are still undecided on where the concept of mutual funds started. The concept of mutual funds was thought to be conceptualized in 1822 by King William I of the Netherlands when he launched several closed-end investment companies. But other historians are contesting this, believing that it was Adriaan van Ketwitch, a Dutch merchant who created an investment trust in 1774 came up with the idea.
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 the year 1924, another fund known as the Massachusetts Investors Trust was created which simultaneously signified the beginning of the modern mutual fund. In a year's time, the fund accumulated an asset base of $400,000.00 with 200 shareholders. Four years after its establishment, the Fund offered its shares to the public. At the same time, another fund named as the Wellington Fund was formed and was the first one to include stocks and bonds as investment options. This heightened the demand for stocks and likewise increased its prices. Thus, the year 1928 was considered to be one of the most illustrious years in the mutual fund history.
From its peak in 1928, an unexpected stock market crash was experienced the following year. Wall Street experienced its worst crash ever and the values of stock decreased. In the same manner, the demand for goods also declined rapidly leading to the Great Depression. But despite this disaster, something turn out positively such that the government finally took notice of the mutual fund industry and subsequently passed governing laws to protect the 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, it continues to be the leading investment option of investors. The mutual fund industry withstood the changes of time and economy throughout the years, emerging stronger every time. This is one reason why people are investing in mutual funds because they know that it can stand the test of time with a big potential to grow even more. - 23208
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.
The mutual funds of today are very different from the mutual funds our grandfathers invested in. It took several years to add the changes necessary for it to become what it is today. Even historians are still undecided on where the concept of mutual funds started. The concept of mutual funds was thought to be conceptualized in 1822 by King William I of the Netherlands when he launched several closed-end investment companies. But other historians are contesting this, believing that it was Adriaan van Ketwitch, a Dutch merchant who created an investment trust in 1774 came up with the idea.
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 the year 1924, another fund known as the Massachusetts Investors Trust was created which simultaneously signified the beginning of the modern mutual fund. In a year's time, the fund accumulated an asset base of $400,000.00 with 200 shareholders. Four years after its establishment, the Fund offered its shares to the public. At the same time, another fund named as the Wellington Fund was formed and was the first one to include stocks and bonds as investment options. This heightened the demand for stocks and likewise increased its prices. Thus, the year 1928 was considered to be one of the most illustrious years in the mutual fund history.
From its peak in 1928, an unexpected stock market crash was experienced the following year. Wall Street experienced its worst crash ever and the values of stock decreased. In the same manner, the demand for goods also declined rapidly leading to the Great Depression. But despite this disaster, something turn out positively such that the government finally took notice of the mutual fund industry and subsequently passed governing laws to protect the 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, it continues to be the leading investment option of investors. The mutual fund industry withstood the changes of time and economy throughout the years, emerging stronger every time. This is one reason why people are investing in mutual funds because they know that it can stand the test of time with a big potential to grow even more. - 23208
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posted by X - Men @ 4:22 AM
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