Price increase, or capital appreciation, is not the only way you can make money on stocks.
Many companies also pay yearly dividends. These are cash payments that represent a portion of profits. However, it is entirely up to the companies whether to pay out dividends or not. They are not obligated to.
But some companies have policies to pay regular dividends; they will return a portion of their earnings to reward their investors.
Diversify your risks
While history shows that the prices of stocks of good companies will rise in the long run, there are no guarantees -- especially when it comes to individual stocks. Companies do go bankrupt. When that happens, the share price drops to zero (remember Enron?) and you lose all your money.
The best way to avoid this heartache is to diversify your investments by owning a variety of stocks. That way, the collapse of a single company wouldn't give you a minor stroke.
You can either choose to hold a range of different stocks and monitor each one, or simply buy into an equity mutual fund, which is a diversified collection of stocks, and let a professional fund manager manage your money.
These fund managers spend all their time studying companies and their earnings potentials and chances are that they will do better at stock picking and make more money for you.
What you can be assured is that, there is definitely less stress, as you won't need to watch prices everyday!
Many companies also pay yearly dividends. These are cash payments that represent a portion of profits. However, it is entirely up to the companies whether to pay out dividends or not. They are not obligated to.
But some companies have policies to pay regular dividends; they will return a portion of their earnings to reward their investors.
Diversify your risks
While history shows that the prices of stocks of good companies will rise in the long run, there are no guarantees -- especially when it comes to individual stocks. Companies do go bankrupt. When that happens, the share price drops to zero (remember Enron?) and you lose all your money.
The best way to avoid this heartache is to diversify your investments by owning a variety of stocks. That way, the collapse of a single company wouldn't give you a minor stroke.
You can either choose to hold a range of different stocks and monitor each one, or simply buy into an equity mutual fund, which is a diversified collection of stocks, and let a professional fund manager manage your money.
These fund managers spend all their time studying companies and their earnings potentials and chances are that they will do better at stock picking and make more money for you.
What you can be assured is that, there is definitely less stress, as you won't need to watch prices everyday!
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