Investment opportunities can be such an overwhelming experience for investors, especially those new to the “money game.” Investors find themselves facing so many alternatives; there are stocks and bonds, mutual funds, commodities, securities, currency exchanges and more. One popular choice for many investors is “mutual funds”. Mutual funds can be extremely diverse but complex investments and have become one of the most popular ways to invest, especially in the United States. Americans have been profiting through investing in mutual funds for many, many years.
In 1924, the Massachusetts Investors Trust was created and it is the first mutual fund to be offered in the United States, but the concept of a group of investors pooling their money together for one big investment goes back even farther. This style of investing can be traced back to the mid – 19th century in Europe. In 1893, Harvard University staff and faculty were the first group of investors to do it in the United States and it was this collective investment that went on to become the very first mutual fund in US history. This fund was extremely profitable for the initial 200 or so investors who started out with a total investment of $50,000 and parlayed that into almost $400,000 in about one year! Now that is the kind of return every investor dreams of and it’s not hard to see why mutual funds became so popular.
In today’s market there are approximately 10,000 different mutual funds available in the United States with approximately 83 million investors participating. As a result, mutual funds investing has proliferated and become one of the most popular and wide-spread forms of investing in the US.
After the great stock market crash of 1929, the rules for investing in mutual funds changed dramatically. The Securities & Exchange Commission (SEC) was created, and with the help of legislation, most notably, the Securities Act of 1933 as well as The Securities Exchange Act of 1934, the government now would take a pivotal role in trying to protect potential investors from getting ripped off. The SEC legislation requires that all publicly traded companies file their financial information with them, so that investors can discern which companies are healthy, profitable and ready to grow from those that appear doomed for failure and should be avoided.
As a result of the government established SEC, investor confidence grew and mutual funds rebounded by the 1960’s and took on new dimensions and profit opportunities. The SEC policies helped give birth to a diverse population of eager investors which continues to this day.
Despite its ups and downs historically, investing in mutual funds has proven itself to be a popular and worthwhile avenue for many investors. But it should be noted that while investing in a properly managed mutual fund can be profitable, there is an element of risk and one should always do their homework and due diligence before making any investment.
Linda’$ Money Network http://www.lindasmoneynetwork.com
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