Whycansomefundskeepgoingupwhilestocksgoupanddown?

Why do some funds keep going up while stocks go up and down? From my personal point of view, this is really a matter of two questions: What is a fund? What is the essential difference between a fund and a stock? As long as these two issues are clear, you will understand the reason why some funds can always go up, while the vast majority of stocks fluctuate and develop.

funds

First of all, let's understand what is a fund? A fund is a fund company that aggregates the funds of many investors, which are held by a fund custodian and benefit from investment by professional investors. Then, as an investment vehicle, the fund can invest in stocks, bonds, bank deposits and so on.

To put it more simply, investors do not know the investment skills, then the professional investors to help do not know the investors to take care of the assets, and then the bank to trust the investors' money, so that the basic model of the fund is formed.

stock

So when you see this, you should know the difference between funds and stocks. Stocks are a range of investment varieties for a fund, and a stock represents only one company, while a fund can invest in many stocks at the same time. In this way, a single stock is bound to fluctuate greatly up or down, while a fund that invests in many stocks at the same time can diversify risk to reduce volatility.

Of course, not all funds go up all the time, and when the stock market is bad, the fund will also go down. In addition to currency funds and some pure bond funds can always go up, other types of funds will more or less fall.

All investments are risky, but the investment structure is different and poses a different level of risk. Both funds and stocks have their own advantages and disadvantages. So, you must figure out your risk tolerance before you invest and then make a choice to choose the right investment product for you.