Different types of funds have different risks and returns. Generally, the risks of money funds are relatively small and the returns are relatively stable, while the returns of stock funds are relatively high. Some people will be confused, for example, why are the returns of stock funds relatively high? What's the reason? We have prepared relevant contents for your reference.

The reason why equity funds earn higher returns is because equity funds require that no less than 8% and no more than 95% of their assets be invested in the stock market. Therefore, when the heavy stock market invested by equity funds is better, the funds will also rise relatively, so the returns will be higher.

But when you invest, you should remember that you should not only look at the income of the fund, but ignore the risk of the fund. The risk of stock funds is also very large, and it is possible to suffer heavy losses when the market is bad.

For example, suppose an investor has 1, yuan to invest in the stock fund market, and suppose that the annual increase of the fund is 3%, then the money he can earn in a year is 1, * 3% = 3, yuan, which will only happen when the market is good.

Then if the stocks invested by the fund are falling, if the annual decline is 3%, then the money lost in one year is 1, * 3% = 3, yuan, so the risks and returns of stock funds are relative, so everyone should be cautious when investing.

Therefore, the high return of equity funds will only be high when the heavy stocks invested are rising. If the heavy stocks are generally falling, they may lose their principal, and the return may not be as good as that of money funds. Therefore, equity funds do not necessarily mean high returns, but only when the market is better.

when selecting stock funds, you can look at the heavy stocks of the fund and analyze whether these stocks are likely to rise. If you have, you can consider buying them. If you don't like these heavy stocks, you are not recommended to buy them because there is the possibility of losses.

The fluctuation of stock funds is relatively large, and it rarely goes up or down all the time, because the fund will be liquidated when it falls to a certain extent. Therefore, when choosing stock funds, we should also look at the fund size. Don't choose funds with too small a fund size, which has poor anti-risk ability.