From the accounting point of view, capital is a narrow concept, which refers to funds with specific purposes and uses. Generally speaking, funds mainly refer to securities investment funds.
Funds in China can be divided into many types, and different types of funds have different ways to make money. For example, the money fund, the way to make money is the interest income of bank deposits and the payment of short-term bond maturity income. There may be three ways for bond funds to make money, namely, interest income due to bonds they eat, trading income due to fluctuations in the bond market, and income from insufficient stock investment.
Relatively speaking, equity funds have higher risks and higher returns. The way for such funds to make money is to invest in stocks and realize returns through stock price rise or dividends of listed companies.
Speaking of the principle of fund making money, simply speaking, fund companies use the money bought by investors from the fund to invest in stocks, creditor's rights and so on. And then give part of the money earned from the investment to investors, thus forming the investment income of the fund.
Different from stock trading, the essence of funds is that professional teams manage assets, and the investment of fund products has different directions, which can be shared at the risk level to reduce investment risks. In addition, fund products are managed by professional teams, which do not require investors to have professional investment knowledge, unlike many stocks to study.