On 21 March 1924 a securities salesman named Edward Leffler did something that changed the economy for good — first America’s, then the world’s. Nobody realised it at the time: inequality had yet to peak, child labour was still legal, and the Great Depression was still to come. But today it is hard to overstate what Leffler did.
By the early 20th century the Industrial Revolution was in full swing. Ordinary lives were changing fast, and not always for the better. Millions moved to the cities in search of new opportunities, but paid for it with their health and endless shifts. Child labour remained the norm right up to the late 1930s. New technologies demanded enormous investment, which concentrated capital in the hands of a small elite: the Rockefellers, the Carnegies, the Vanderbilts and other industrial dynasties that built monopolies and amassed vast fortunes.
It was at this point that Leffler and two partners created MIT — not the Institute of Technology, but the Massachusetts Investors Trust, America’s first open-end mutual fund. His idea was revolutionary: instead of one person buying shares in one company, a group of people could pool their money and invest in a broad set of assets at once. The fund bought securities of businesses from different industries, lowering risk and opening investment to people who could never have afforded it before.
Over time this model made investing a mass activity. You no longer had to be a Rockefeller to share in economic growth. Even ordinary workers could become part-owners of the biggest companies, if only in a small way. MIT still exists today. The fund itself holds around $6–7 billion, while MFS, the firm that grew out of it, manages hundreds of billions.
Assets and liabilities: investing in plain language
To understand how funds like this build wealth, you need to get the basic terms straight.
An asset is something that puts money in your pocket.
A liability is something that takes money out.
From this point of view, the car you drive every day is a liability: fuel, tax, insurance, repairs, fines, parking, depreciation. The flat you live in is also more often a liability: mortgage, tax, upkeep, utility bills.
But a second flat that you let out is an asset. If the rent covers the costs, it generates positive cash flow.
This approach, popularised by Robert Kiyosaki, differs from classic accounting. Accounting treats as an asset anything that has value. Kiyosaki treats as an asset anything that brings in money. For understanding investment, this cash-flow view is genuinely useful, as long as you keep the context in mind.
Why active income never makes people truly rich
As income rises, spending almost always rises too — that is human nature. People start earning more and immediately raise their standard of living. The result is the “rat race”: to keep up with growing spending, you have to keep working. Active income is always limited — by time, energy and health.
Passive income is money that comes in regardless of your daily effort. It is produced by assets: shares, bonds, stakes in businesses, property, deposits, ETFs — anything that can work instead of you.
Building passive income starts with a change of mindset: part of your money has to go, regularly, into instruments that generate income rather than just cover expenses.
Why we are afraid to invest: lessons from post-Soviet crises
Distrust of investing in Russia and the CIS countries has historical roots.
1992 — hyperinflation: prices rose roughly 26-fold in a single year.
Savings in passbook accounts were wiped out.
Mid-1990s — widespread pyramid schemes: by some estimates, more than ten million people lost money.
1998 — default, the collapse of private banks, no deposit insurance.
These events created a generational fear: handing your money to someone else is a risk.
But there is a way out, and it has been known for a long time.
Diversification: the foundation that protects your capital
The point of diversification is simple: don’t put all your eggs in one basket.
If you have a single source of income or a single asset, you are vulnerable. Several different, unrelated assets reduce risk. You give up part of the potential profit, but gain stability.
Modern portfolios include:
- shares
- bonds
- gold
- cash
- property
- funds (ETFs, mutual funds)
It’s boring, but it’s reliable.
Venture investing: a game for the bold
But there is also the opposite strategy — venture capital.
Venture investing means putting money into young start-ups. The risks are huge: nine out of ten projects usually fail. But if one of them takes off, it covers all the losses and returns hundreds of per cent.
This is an area where what matters is not the reports but the people, the idea and the ability to survive. You can get into such instruments through crowdfunding platforms, syndicates and pooled funds, with as little as a thousand dollars. But venture capital should never replace basic diversification — only complement it as the high-risk part of a portfolio.
The balance that builds wealth
A well-built strategy might look like this:
- 70–80% — reliable diversified assets
- 10–20% — alternative areas: venture capital, crypto, private projects
- steady top-ups to the portfolio
- control over spending and lifestyle
- systematic thinking, not random bets
That is how stability is built. And if one bold investment really does take off, it can change everything.
Another story of how one person changes an entire industry — Larry Ellison and Oracle.
What still holds today
The main lesson of mutual funds is the power of diversification and a regular approach, not the hunt for one guaranteed winning idea. A historical example explains the mechanism, but it does not replace your own assessment of risk, time horizon and fees.
