How Mutual Funds & Big Firms Really Make Money 🧠💰

Most people think firms make money only when investors profit.

That’s not true.

Here’s how they actually earn 👇

1️⃣ Management Fees

They charge ~0.5%–2% yearly on your investment.

📌 Profit or loss — they still get paid.

2️⃣ Performance Fees (Some Funds)

If returns beat a benchmark, firms take a cut of profits.

3️⃣ Entry / Exit Fees

Some funds earn money the moment you invest or withdraw.

4️⃣ Securities Lending

Your stocks are lent to short sellers → firms earn interest.

5️⃣ Trading Advantages

Big firms trade in massive volumes → better prices & rebates.

🔑 Reality Check:

Investors take the risk.

Firms collect the fees.

👉 That’s why long-term money always flows to fund managers.

Do you prefer mutual funds or ETFs?

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