At the beginning of the 13th century, the concept of "trust management" first appeared. It was then that such categories as the manager and the owner were determined. The theory of economics says that at that time the basic principles were formed on which cooperation was based right up to the present day. Over time, property management has become more popular, as the wealthy stratum of society has grown, there are more people who own certain assets. Trust management today is a collective investment.
Mutual Fund: how it developed
The history of collective investment has been reading for more than a century. For the first time, the mechanisms applicable in modern society began to be used in the 19th century. The pioneers were Belgian and Swiss merchants. When the American economy began to develop rapidly after the First World War, collective investment spread to the United States.
The regulation of mutual funds and trusts by laws in America has been practiced since 1939. In 1940, the issue of taxation was clarified. However, the abundance of difficulties of that time and the lack of a regulatory framework led to the fact that until the 50s, collective investments were not interesting to Western entrepreneurs. The new course of development was associated with Roosevelt's policy. Thanks to the introduction of strict laws, ordinary people were finally able to trust their money to managers, and they, in turn, tried to prove that they could not only save capital, but also increase it.
Crises and their overcoming
Collective investments experienced another decline in the 70s, when another crisis struck due to deficiencies in the anti-inflation policy. The “work on mistakes” lasted about four years, and the end product was the fund development strategy that exists to this day.
Today's management companies are more interested in small investors. Thanks to this approach, in 2000 growth was recorded that exceeded forecasts by one and a half times. In total, mutual funds totaled more than four trillion dollars in America alone. But nowadays, although the economic situation is still difficult, collective investment funds are growing, while the amount of funds invested by individuals is increasing.
How it works?
The investment market is based on the idea of pooling the funds of individual plots. Each such person has a relatively small amount, but collectively they become a player in the financial market, which cannot be ignored. The investment portfolio has good diversification indicators; managers can expand investment opportunities. The most effective tools:
- purchase of expensive objects, investment in which shows good prospects;
- real estate investment.
Individuals joining collective investment funds receive wide advantages in comparison with direct investors. First of all, they are spared the need to directly, personally solve something. Instead, stock market professionals are involved in strategy and practice. The experience and competence of such employees is the key to minimizing risks, which means that end investors will not lose anything.
Collective investors can work with an appropriate license. All their actions are regulated by the authorities responsible for this and are subordinate to normative acts. Choosing whom to entrust their money to, a private individual studies what mutual funds have a yield rating.This allows you to choose the option that with high reliability will bring considerable profit in the future.
Stock Market: Maximum Security
Within the framework of the stock market, a joint check investment fund and any other type of collective investor is a client working with a credit company. Such an organization offers operations with securities. For a credit company, a collective investor, a national investment fund are practically no different from other persons using the services provided.
At the same time, there are such collective investments that are more demanding. The main goal is to ensure the reliability of asset storage while minimizing the chance of losing money. Credit companies, as active participants in the process, are interested in ensuring that finances are safe, no less than private individuals from whose resources a mutual fund was created.
Work with money: pension as an investment
Studying what mutual funds have a yield rating, one can notice that pension funds are the most popular. These are those collective investments that successfully collect the finances of a huge number of people. At the same time, people interested in pensions make deductions from their wages every month. Although this amount is small, the audience is very wide.
The fund invests funds received from individuals and directs them further to financial institutions to make money “work”. Funds are multiplied, the profit is distributed among all participants. Such collective investments in Russia have become widespread in the last 10-15 years.
Small-scale investors involved in such a process, companies that undertake the collection of money, are financial intermediaries. Form a pension fund help banks, funds. But the organization, which through these intermediaries collects money, invests in person or through managers with the appropriate qualifications.
Collective investors
Investment banks are the main players in the stock markets, raising funds from individual investors and forcing them to “work”. In addition to commercial structures, some other organizations take on this task. People transfer their funds as deposits or on other terms favorable to both parties. Usually the term varies from a year to two.
Insurance companies, pension funds, differing in their features, within the framework of stock markets, in fact, are the same collective investors.
A distinctive feature of “pensioners” and “insurers” is a long period of time, as individual investors transfer their funds to such funds for decades until an insured event occurs or until it is time to retire.
Investment, mutual funds - the third and last type of collective investors. These are legal entities that raise money and work on building finance. Investors, choosing such a legal entity, deliberately place their funds on the investment market, hoping to receive substantial profit.
Insurance and pension funds: features
Such forms of collective investment are designed for a very long time period. Thanks to this, the owners of investment organizations can plan without haste, choosing optimal conditions, due to which their work becomes more efficient. The risk of early withdrawal of the owners of the deposit is very low, and for pension funds it is very simple - it is known in advance when a person will retire and require his money.
Another feature of the work of pension and insurance money is the ability to receive funds from investors of their own free will.If people find out about some stable pension fund or a reliable insurance company, they go here, because at least they have to go to some company anyway: the laws force it. This means that investment companies may not hire people to attract new customers. And this saving allows spending free money on something more efficient.
Reliability comes first
By virtue of all the above, pension and insurance organizations are the most stable companies that are not afraid of the economic crisis. Of course, inflation and other troubles associated with economic difficulties concern them, but to a minimum extent. Even if the cash flow decreases, this does not happen much, as ordinary people still receive a salary and are still forced to insure their cars, life and homes.
Collective Investment: Benefits
Investment banks are a much more reliable and secure option than playing the stock exchange at your own discretion. Money is placed in assets, some of which are sent to profitable, but risky enterprises, others are placed in stable and reliable projects. Due to this, a large investor averages risks with growing benefits. Costs are reduced due to the fact that large investors work with large auction portfolios, which gives them access to favorable prices, inaccessible to those who operate with small amounts.
Collective investments are designed for a long time period, which means that they are socially important, as they work to improve the well-being of ordinary people. This is not only about the interest that people receive when investing in mutual funds, but also the benefit that everyone gets without exception due to the stabilization of the economic situation in the country, in which sustainable investment mechanisms play a significant role.
We invest with taste
One of the most modern and attractive ideas is investing in art. Now this practice is only taking root in our society and is not familiar to everyone. Norms and laws in force in Russia and other countries of the world have not yet thoroughly regulated this area, which sometimes leads to misunderstanding. The world of art exists according to its own rules, but deposits and management companies live according to the laws of business. In addition, insurance firms and expert appraisers are involved in art investments.
Despite certain difficulties, now in Russia there is a fund that allows investment in art. Art investments are of two types:
- investing in the fund that is engaged in the purchase of art values;
- independent purchase of art.
The second option leads to the fact that a person gains ownership of a certain valuable object, and when working with a specialized fund, the investor owns securities, investment shares.
Some features
In practice, investing in art is fraught with some difficulties and expensive financially, so only wealthy people can afford such investments. Particular attention must be paid to the issue of counterfeiting. If we are talking about a fund, then its staff has specialists who can determine the authenticity of an art object. With an independent investment, you will have to hire a third-party independent expert who can confirm the originality of the work.
Remember that buying art objects involves additional costs:
- insurance;
- storage;
- revaluation.
Since it is quite difficult to get acquainted with all the features of working in the art market, it is recommended that novice investors cooperate with a specialized fund. This helps to reduce costs, and at the same time to learn how to work, to delve into this area, to understand by what laws it develops.
To summarize
The practice of collective investment was laid down in the distant past, but only relatively recently it was possible to finally formulate the regulatory and legal framework for the market in this area. World crises have been a strong influence on investment practice, slowing down the pace of market development, however, the modern investor has a choice of organizations ready to make every effort to increase current reserves.
You can work with pension funds, insurance companies and specialized investment funds, mutual funds, funds of objects of art. Each option has certain strengths, weaknesses, features. In any case, when placing your money in a collective investment project, remember that the program will bring income only after years, and sometimes decades.