4 Great Ways To Get Money From Your Stock
There are a lot of different methods to make money from a stock. Appreciation can be extremely powerful, however it is not the only thing to look for. So, how can you make money from a stock that you own? What are the 4 best ways to get money from your long term investments?
1. Dividends
Dividend paying stocks give an investor a nice income that can grow as the company does. When a company wants to share their earnings with their stock holders they can issue a dividends and pay each holder a percentage of their earnings.
A lot of money managers think of this as one of the most powerful ways of making money from a stock. This is because it pays out money over and over again and can really add up. But it is just one of many ways to create a cash flow off of your investment.
2. Capital Appreciation
This is the method that can be the most powerful and therefore is the most popular. The idea is you buy a stock it goes up and you sell it for a profit. Appreciation can be very powerful and picking the right stock can make or break an investor. This makes the overall company very important. Getting into a strong company can be profitable, while getting into a weak company can completely destroy an investor.
3. Covered Calls
Covered call writing can pay off much more then dividends, but they do come with some added risks. If you sell a covered call you are selling someone else the right to buy the stock from you at a certain price on or before a certain date.
This is an extremely powerful strategy, but it does give you some added risk because you may be called out of your position eventually.
4. Selling puts
Another very interesting strategy is called selling naked puts. It can help an investor start to make money even before they enter a stock. By selling a put you are taking on the risk of having to buy a stock at a certain price by a certain time in the future.
If you do not mind getting into a stock put selling can help you start off right by paying you before you even get in.
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