3 Different Ways You Can Make Money Off Your Stock
The stock market has been a very powerful way to make money in the long term. But simply buying a stock and waiting for it to go up is not the only way to make money from your security. Here are 3 ways that you can make money on stocks that you own, all investors can stand to benefit from them.
- Appreciation
Of course the most powerful way of making money from your stock could potentially be the appreciation. Judging from the past the average stock market return tends to stay around 10%. This by itself beats CDs, Bonds, and a wide variety of other investments.
Also stronger companies tend to outperform this by a wide margin which means checking the companies fundamentals can be extremely important.
2. Dividends
A company can choose to pay their shareholders a portion of their earnings in the form of dividends. When the shareholders get dividends they take on no additional risk, but they are able to get a monthly income. Some dividend paying stocks can be extremely profitable because they consistently pay there shareholders.
Looking to see if a stock offers a dividend before investing into it can really be a huge bonus.
3. Writing Covered Calls
Covered call writing is a somewhat overlooked strategy, but that does not mean it is not very powerful. On the contrary, if you are consistently selling them it can be extremely powerful. There is only one disadvantage, you are taking on the risk of selling the stock you own.
When you sell a call you are giving someone else the right to buy your stock from you at a set price and you live with the risk of being called out until a certain date. So if it happens to make a huge move you might end up selling it and missing much of that move. Even so, the strategy has a great potential and may even prove to be more profitable than the other two put together, especially if the stock you are in is not a big mover.
Tags: stock market investing, ways of making money from the stock market
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