2 Ways You Can Make Money As A Shareholder

You should be fully informed about what a shareholder is after yesterday’s 101.

I hope you’re feeling more confident!

It’s great to know and understand what a shareholder is, but how does knowing all of that actually put cash in your pocket?

Well, today I’ll tell you how…

How Do You Make Money as a Shareholder?

There are two basic ways to make money as a shareholder.

One involves a long-term approach (dividends) and the other can involve both long- and short-term strategies (capital appreciation).

Before I go on, I want to make clear that you don’t always make money as a shareholder. You can lose your entire investment and, depending on the type of position, even lose money.

Just a few days ago, for instance, I bought several shares of stock at a decent price. I saw the bounce coming, and I intended to wait it out.

The stock price dipped, and I had a choice to make. I could sell at a loss or wait and see if it would bounce back up.

Based on my experience and my forecast, I decided to take Door Number Three instead. I bought more of the stock because I believed it would pay off. And it did. I would up making more money than I intended in the first place.

But that doesn’t always happen. An investment isn’t a loan, so you’re not guaranteed repayment — and certainly not with interest.

Can you make money? Absolutely. I’m living proof. But you need a strategy.

Dividends

Dividends are monies paid to shareholders based on a company’s earnings. Dividends can arrive monthly, quarterly, or annually, and usually come in the form of cash.

When you get dividends in the form of additional stock, they’re called stock splits. Cash dividends, however, are far more common.

The general idea is that a company divides its earnings equally among its shareholders based on how many shares each individual or entity owns. For the sake of a simplistic example, if you owned 20 percent of a company’s shares, you’d receive 20 percent of its dividends.

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