Modern stock market investing (or trading) has existed since the Dutch East India Company (Vereenigde Oostindische Compagnie or VOC) first issued its shares on the Amsterdam Stock Exchange in 1602. This was the world’s first permanent joint-stock company. Before this, various forms of investment and trade partnerships existed, but they were either private or temporary. The company’s main purpose was to establish a monopoly on the spice trade in Asia.
Dutch citizens could buy one share of the company for a substantial amount of 100 Dutch guilders (equivalent to USD 13,800 in today’s terms) in 1602. By 1637, the year of the Dutch Tulip Mania, the stock price had risen to 400–500 Dutch guilders per share (USD 24,000–30,000 in today’s terms). By the 1720s, the company reached its peak, with each stock trading at 1,200 Dutch guilders per share (USD 165,600 in today’s terms). At this time, it was the most valuable company in the world, worth 78 million Dutch guilders—the equivalent of USD 7.9 trillion today. This is comparable to the current market capitalisation of 20 of the world’s largest companies, including Apple, Microsoft, Amazon, Berkshire Hathaway, Tencent, ExxonMobil, Meta, and Wells Fargo.
Why did I share this story?
Because in 1602, a group of forward-thinking individuals made a bold decision: instead of letting their hard-earned guilders sit in a bank, they took a calculated risk and invested in a newly established company. In doing so, they placed their trust in 1,100 VOC employees—sailors, soldiers, merchants, and administrators—who worked relentlessly to generate wealth.
These investors made their money work for them, even while they slept.
Let’s take a modern and widely cited example—Apple Inc. Apple went public on December 12, 1980, with an initial offering price of USD 22 per share. Over the decades, it grew into one of the most valuable companies in the world, reaching its peak share price of USD 260 on December 26, 2024.
Now, I hear you—this is Apple we’re talking about, a global giant with an unmatched track record. You might argue that many promising companies have collapsed after showing tremendous potential. Isn’t investing too risky?
Absolutely, it is. But here’s the advantage: we live in the best time in history to invest. Today, we have access to advanced financial tools that help mitigate risk. My favourite tool was first introduced in 1990 in Canada by a former physicist and financial innovator - Nate Most at the Toronto Stock Exchange (TSE). This complex tool was called Exchange-Traded Funds.
Exchange-Traded Funds
An Exchange-Traded Fund (ETF) is a marketable security that tracks an index, commodity, bond, or a basket of assets.
Let’s simplify it.
Imagine you want to buy fruits. You could buy just one apple (like investing in a single stock), but what if that apple turns out bad? Instead, you buy a fruit basket with apples, bananas, oranges, and grapes. Even if one fruit isn’t great, the rest make up for it.
That’s what an ETF does. Instead of buying one company’s stock, an ETF lets you invest in a group of companies at once. This reduces risk because if one company doesn’t do well, the others in the ETF can balance it out. ETFs trade on the stock market just like individual stocks, so you can buy and sell them anytime. They are an easy and affordable way to invest in different sectors, industries, or even the entire stock market.
For example, here are some of the popular ETFs in the Australian Stock Exchange:
IVV (iShares Core S&P 500 ETF) – A U.S.-focused ETF that tracks the S&P 500 Index, providing exposure to 500 of the largest U.S. companies, including Apple, Microsoft, and Amazon. It’s a popular choice for investors looking for broad market growth and long-term returns.
VAS (Vanguard Australian Shares Index ETF) – This ETF tracks the ASX 300 Index, giving investors exposure to the top 300 Australian companies, such as BHP, Commonwealth Bank, and CSL. It’s ideal for those wanting to invest in the Australian stock market.
VAP (Vanguard Australian Property Securities Index ETF) – A real estate-focused ETF that invests in listed Australian property trusts (REITs), including major commercial, retail, and industrial properties. It’s suited for those seeking diversified exposure to the Australian property market.
VEU (Vanguard All-World ex-US Shares ETF) – A globally diversified ETF that provides exposure to large and mid-cap stocks outside the U.S., covering markets in Europe, Asia, and emerging economies. It’s useful for investors looking to diversify internationally beyond U.S. and Australian stocks.
In my next post, I’ll dive into the essentials of getting started with ETFs, common pitfalls that new investors should avoid, and a behind-the-scenes look at how I incorporate ETFs into my own portfolio.
Disclaimer: I am not a financial advisor, and the information shared in this blog is based on my personal experiences and learnings. Investing involves risks, and financial markets can be unpredictable. Before making any investment decisions, I strongly encourage you to conduct your own research and consult a certified financial advisor to determine what’s best for your individual financial situation.