In my previous post I talked about a mutual fund that had averaged a rate of growth of more than 8% per year.  It occured to me that some people might not understand what a mutual fund is or why it is beneficial to have one.  Here's a quick history and description of mutual funds.

Mutual Funds gained a lot of popularity in the 1980s and 1990s, and now roughly one in three Canadians owns a mutual fund.  However, pooled investments (many investors putting their money in a single "pool") have been around for more than 120 years, and the first modern mutual fund was actually created in 1924.  But what exactly is a mutual fund?

Most of the descriptions I've found are either boring or they use complex financial terms.  The video below is short and simple, but it does the clearest job of describing the basic idea behind the concept of a mutual fund.  Enjoy.

Leave a Reply.