You can only make money if you are lucky after buying a fund or if you buy a good fund, but you don't know how to make money. All you know is that the assets in your account are increasing. Let's give you an overview of how the fund makes money.

What is the principle of fund making money?

The principle of fund making money is that funds make money through investment targets, and fund investments are mainly cash, bank deposits, bonds, stocks and so on. For example, stock funds mostly invest in stocks. After most of these stocks rise, the funds will naturally make money, and then divide the money according to the proportion of investors' shares.

The target of fund investment varies with different types of funds. For example, the IMF invests in interest income from bank deposits and payment of short-term bonds. There may be three ways for bond funds to make money: interest income generated by bonds, trading income generated by bond market fluctuations and income without stock investment. Equity funds make money by investing in stocks, screening those good stocks to buy, the stock price rises, the fund makes money, and investors make money.

Money funds are safe to invest, so they are basically guaranteed. Bond funds are safer than stock funds, but their returns are usually lower than stock funds. However, if most of the stocks invested by the fund fall, then the income of the fund will be miserable and investors will also lose money.

After reading the above introduction, I believe everyone has a more comprehensive understanding of the principle of fund making money. In fact, the principle of fund making money is that investors give money to fund managers, who invest instead of us, share money and bear losses. This is called sharing weal and woe.