There are 3 ways that you can make money from a stock that you own, or an investment that you want to get into. Ideally you want to be making money all 3 ways every time you enter an investment.
There are 3 ways that you can make money from a stock that you own, or an investment that you want to get into. Ideally you want to be making money all 3 ways every time you enter an investment.
The 3 ways are
1. Dividends.
Some stocks offer a dividend, which means they actually pay you for owning a share of the company. This makes sense because when you buy a stock you are buying a share of the company, so you should be entitled to a share of the profits that the company generates. Not all companies offer dividends, but if they do it can really be a nice thing to get.
2. Appreciation.
Obviously everyone who buys a stock does so because they believe the stock’s value will go up. So this should the Major factor when looking for a stock to invest in. You want to get into a stock that is both fundamentally strong and starting to trend upwards. When you are looking to invest you want to buy a stock for the long term, so look for companies you believe will be around for the long term.
3. Selling Covered Calls.
The last and probably the most powerful way to generate money from stocks you already own is by selling covered calls on it. When you sell covered calls on a stock what you are actually doing is selling someone else the right to buy a stock at a certain price on or before a certain date. If the stock reaches that level by that date you will have to sell your stock for a profit. If it doesn’t reach that level the option will expire worthless and you can sell a new one.
Covered calls can make up a huge portion of your profit so anytime I want to buy a stock for the long term I want to make sure the stock is option able.
There are certainly a number of ways you can make money from a stock, and investing is definitely worth the effort.
To learn more about the stock market visit http://www.stocks-simplified.com
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