But investments hasn’t always been this democratic. Long before the advent of stocks and shares ISAs, DIY fund platforms and low-cost stockbrokers, it was very difficult for ordinary people to get access to the stock market.
According to James Jefferys’ book Business Organisation in Great Britain 1856-19141, the average investor in the mid 19th-century “was wealthy, tended to confine his investments to two or three companies and was interested to a certain degree in the running of these companies”. Investment was for the few, not the many, and most did not have the resources or the knowledge to benefit from investing in the railroads or any of the other financial success stories of the period.
The Companies Act of 1856 and 1862 gave the world limited liability companies to invest in. This new structure helped kick-start and investment revolution, but it took the vision of a man called Philip Rose to create a way for ordinary people to invest safely, without putting all of their financial eggs into one basket.
Investing becomes accessible
Mr Rose, who later became the financial adviser for Prime Minister Benjamin Disraeli, founded the Foreign & Colonial Investment Trust on 19 March 1868.
Together with co-founders Samuel Laing, a barrister and James Thompson Mackenzie, deputy chairman of the East Bengal Railway, he aimed to make stock market investing available to those of “moderate means” for the first time.
The trust represented a step-change in the way individuals could access the stock market. For the first time, investors could get access to a large number of investments through buying just one fund, making the trust the forerunner of all sorts of investment vehicles, such as unit trusts, Peps and ISAs.
The trust was designed to take advantage of the benefits of overseas investment, while managing the risks. It would not invest more than 10pc of its assets in a single venture, providing investors with the opportunity to gain exposure to a diversified portfolio of securities through a single modest investment.
Making the humble as secure as millionaires
Initial investment in the Trust ranged from as little as £100 to as much as £50,000. At the time, even £100 was a substantial sum – you could rent an unfurnished house in Holland Park for £40 a month – and could have represented a family’s entire life savings. This meant it was important that the investment was diversified to prevent sudden shocks if ventures failed.
Mr Rose’s “investment vehicle for the many” produced as diverse a shareholders’ register as anyone could wish for. In the 1800s, the shareholder register included a leather cutter, a flax spinner and an investor described only as a “married woman”, as well as an earl, a farmer and an Army officer.
As the John O’Groat Journal put it on 2 April, a few weeks after launch: “The Foreign & Colonial Government Trust aims at placing the humble and necessarily cautious investor on as secure a footing as the millionaire.”
That principle has stood the test of time for 15 decades, through two world wars and many financial crises, and the trust is still available to purchase on the London Stock Exchange by anyone who wishes, no matter how moderate their means.
As always please remember that investments carry risk and you may not get back what you originally invested
‘This article written by Rosie Bigmore was first published on the Telegraph The day investing changed for ever