INVESTINGBUDGETING

A Brief History of Investing

Investing is commonly talked about, encouraged and considered one of the best ways to build wealth and financial wellness. With so much information to be found and so much conversation to be had, have you ever wondered how investing got its start? I’m a firm believer that understanding the past can help us better understand our present and potentially the future. So, let’s look at the history of investing, shall we?

Ancient History

Investing has been around for millennia, with the most notable period being medieval times in Europe. At this time, Italian city dwellers traded commodities like grains, metals and silks. Economic growth due to trade gave way to early forms of investing where those engaging in the risk of investing earned interest. This practice continued for centuries and is the root of modern investing.

Modern History

Although investing was common in medieval times, investing documentation really began in the early 17th century. In 1602, Amsterdam led the way for investors to connect with the public markets, and 190 years later, the New York Stock Exchange (NYSE) followed suit in 1792. Many herald the Industrial Revolutions of 1760-1840 and 1860-1916 as a financial revolution because, for the first time in modern history, people had enough saved to invest by purchasing stocks. With these revolutions came the Roaring ’20s which resulted in the formation of key financial firms such as Goldman Sachs, J.P. Morgan Chase, and the now-bankrupt Lehman Brothers.

The Roaring ’20s came to an abrupt halt with the crash of the stock market in 1929 and the onset of the Great Depression. However, after World War II and the economic boom of the late 1940s and 1950s, Americans began investing again. As a result, the Dow Jones surpassed the peak it reached in 1929 prior to the crash.

Contemporary History

The National Association of Securities Dealers Automated Quotations, better known as the NASDAQ, was created in 1971, making it the first automated exchange in the world and the first electronic stock market. Additionally, according to Investopedia, the 20th century gave way to new investment vehicles such as hedge funds, private equity, venture capital, real estate investment trusts (REITS) and exchange-traded funds (ETFs). With the introduction of the internet to the public, in conjunction with the new investment options, investing increased exponentially. Now, with just a few swipes of a screen or clicks on a keyboard, you can invest in seconds.

So, what does this short glimpse of investing history mean for you? It’s a call to recognize the longevity that investing has. I feel we are lucky to be born in such a time that we can utilize current investment models and options for our own financial wellness. It’s important to remember one thing: research. With the many options available for investing, it’s crucial to do your research to determine which option is best for you, your current stage of life, your finances and your future.

Sources:

https://www.paulmilleradvisor.com/blog/brief-history-investments

https://www.investopedia.com/terms/i/investing.asp#:~:text=While%20the%20concept%20of%20investing,connected%20investors%20with%20investment%20opportunities

https://www.faculty.umb.edu/gary_zabel/Courses/Phil%20281b/Philosophy%20of%20Magic/Dante.%20etc/Philosophers/End/bluedot/banking.html

https://www.investopedia.com/terms/n/nasdaq.asp#:~:text=The%20Nasdaq%20is%20one%20of,automated%20exchange%20in%20the%20world