What are mutual funds? give me just conceptual definition?
Answers: A mutual fund is a pool of money from various investors. That pool of money is handed over to a manager to handle. The manager lays down certain rules called a prospective which is given to every investor. This lets the investor know what he or she is getting into. Within those rules, the manager tries to make the investor money, in exchange for a percentage of the pool of money. Since these pools of money can run into the billions, many managers have made millions of dollars for themselves even though 80% of the mutual funds don't beat cheaper indexes which are a buy and hold type of deal.
It might not apply in every case (I've just got involved w/ this stuff myself), but mutual funds are, instead of a single stock or single bond, often a blend. (Especially as it relates to 'index' funds).
A plus to 'index' funds (and perhaps other mutuals), is that instead of tying money into a specific company, you are diversified, so if one company in the 'fund' goes down, hopefully others do the opposite and it goes up anyway.
Example: if you buy shares in McDonalds, your money goes up and down based on McDonalds share price. If a bunch of people get ecoli from a bad Big Mac you could lose a lot of change.
But if you have a 'Dow' index fund, your 'risk' is spread out to other companies like Walmart, ExxonMobil, Pfizer, Disney, General Electric, Proctor & Gamble, etc. So that ecoli scare at Mickey D's might dent the fund, but if Pfizer has a good ecoli drug on the market it could even out. And then people run out to Walmart to buy stuff to clean up the mess...
http://www.sec.gov/investor/pubs/inwsmf.
My doubt is if i get the profit from stock market ,where the money came from?
Answers: It comes from the value of the company when you sell the stock...you bought it at one price then it hopefully goes up and you sell it at a higher price...there's your profit. If you invest in a mutual fund (which is a small portfolio of stocks and maybe bonds) then it's performance is based on the stocks and bonds that are held in that fund. Which again is based on the performance of the companies that are invested in from that fund. And the divedends paid are a sharing of the profit from the company you are invested in...some also pay capital gains which also come from the performance of the company.
The question is a bit vague.
If you mean profits from dividends, the money comes from the profit the company makes.
If you mean the profit from selling stocks for a higher price than you bought them, the profit comes from the people who bought the stocks at the higher price.
To add:
In addition to 'dividends' (as well as short & long term gains that mutual funds can get), there's the matter of realized vs. unrealized gains.
An unrealized gain means that your stock has gone up, but you haven't sold it yet. (And unrealized loss is it's gone down but not sold yet). The 'money' in effect is tied up to the very small portion of the company that you are the owner of as a stockholder. You haven't made any money or lost any money as far as the government (aka the 'Taxman') is concerned, until you sell (again, not including dividends or mutual fund stuff). (Which is why if something 'loses' it may often be best to just leave it there if it might go back up).
A 'realized' gain means you either have in your hand a final profit or a loss from those shares that you sold. If you have a 'gain', then the IRS wants a piece of it. If it's a 'loss', you can claim it against any gains you have to reduce tax liablility.
It is a common misconception that profits are always balanced by losses. That is, if you made a profit then someone must have made a loss. This is simply not true as this is not a closed system
Companies grow and you "share" in that growth so not only are your shares worth more (higher-priced), but the state of the company allows to make bigger dividend payments to its shareholders..
Does it matter?
If i buy something at a pound and sell it to you at two pounds and you sell it at three pounds, you have made a pound off me and also I have made a pound. So I suppose you could say it,s the last person/last people holding the item when the market goes down, or the bubble bursts. You should read the true story about the tulip bulb market in Holland. In 1623, a single bulb of a famous tulip variety could cost as much as a thousand Dutch florins (the average yearly income at the time was 150 florins). , or the South Sea bubble. Or, come to that , Enron!!
Some of the answers sem to suggest the profit/loos comes from the company. This is not so as the Stock Exchange is in the main a secondary market.
If you buy a Pepsi at $1.00 at Wal-Mart and sell it at $2.00 at your restaurant then you make $1.00 and the money comes from the customer.
It's the same thing with stocks.
If you buy a Pepsi stock at $1.00 at Zecco from David Filo (He is selling) and you sell it at $2.00 at Zecco again to Jerry Yang (He is buying) then your money comes from Jerry Yang.
Just wondering, is within anybody surrounded by this forum who tried this invest $6 using paypal that certainly earn?
from it? if u tried it and it work, speak up and show some proof.Answers: actually any body everey daytime loke for you
What do you mean? Are you refering to getting a verified report with Paypal? They do deposit a small amount contained by your bank tale to determine if it is legitimate. Show proof? I don't have an idea that so.