Friday, February 4, 2005

Personal finance Q&A

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Question: How did mutual funds get started?

Answer: The roots of mutual funds can be traced back to England in 1868, when the newly formed Foreign and Government Colonial Trust promised "the investor of modest means the same advantages as the large capitalist . . . by spreading the investment over a number of different stocks."

With increasing availability of online brokerages and news of investors striking it rich or losing fortunes with individual stocks, a mutual fund often is a more calming place for a conservative investor to put hard-earned cash. Mutual funds definitely have a valuable place in an investment portfolio, particularly in a volatile market and when the cost of investing is an issue. So, what makes mutual funds attractive? For most investors, it's the opportunity to increase their exposure to a broad range of the financial markets.