The world’s first stock exchange started in Amsterdam in 1602.

The world’s first stock exchange opened in Amsterdam in 1602 and it didn’t look anything like what we imagine today.

At the time, global trade was risky and slow. Ships travelled for months to bring back spices, silk, and other goods. If a ship sank, investors could lose everything. Earlier, people funded these voyages individually, which meant one bad journey could wipe someone out.

The Dutch East India Company solved this problem by creating a new idea. Instead of investing in a single trip, many people could invest small amounts in the trading company. Their money was pooled together and used across many voyages. 

In return, the investors received shares in the company. This meant they owned a small part of the business and were entitled to a share of its profits. When ships returned successfully and goods like spices were sold, investors earned returns, sometimes in cash and sometimes in goods. If the company performed well, the value of their shares also increased, and investors could sell them to others.

Although the risk of the ship being lost at sea was not eliminated, it was spread between different voyages and reduced for each individual. This exchange also led to investing becoming something that more people could participate in rather than just wealthy merchants. 

This idea of pooling money, sharing risk, and earning returns based on performance was revolutionary as it laid the foundation for modern stock markets. The technology has changed, but the principle remains the same: sharing risk to fund businesses and make growth possible.