Mutual funds continue to be popular among investors mainly because of the return rate it brings to their investments. Contrary to traditional ways of investing through certificates of deposit and money market accounts, when you invest in mutual funds, you can expect the largest return for your investment.
Getting started with mutual funds is a good way to test the waters, so to speak. Bonds and stocks are great, no question about it, but in order to succeed with trading them you have be really adept at making decisions concerning your investment. With mutual funds, all you have to do is to watch your money grow under the skillful maneuver and decision-making of a professional fund manager who sees to it that the fund’s assets are spread over a diverse portfolio of investments to minimize 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, whoever came up with the idea really did some good thinking because it was an idea that was feasible enough for France and Great Britain to acknowledge. The United States grasped the idea only in the 1890’s. In 1907, a fund called the Alexander Fund was established in Pennsylvania and was said to have paved the way for the modern mutual fund. Addendums and modifications were made later to include the ability to make withdrawals on demand 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.
With the laws in place, trading in the stock market began to peak again with the renewed trust of the investors in the system. In fact, by the end of the 60’s, close to 300 funds were established with assets amounting to $48 billion. This started the reign of a lucrative mutual fund industry.
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.