Investing into the stock market can be a great way to build your wealth, increase your income, and save for retirement. In fact this is probably why it is so recommended by financial professionals from around the world. If you are starting to invest it can benefit you to learn different ways you can make money off of a stock that you own.
There are a few different ways which a stock that you already own can make you money. Ideally an investor would want to find a stock that can make them money in each of these three ways.
1. Long Term Growth
The first way that you can make money from the stock market is from appreciation and growth. Simply looking at how strong the company is and investing into the ones that have strength can be a fantastic long term strategy. Chances are it will pay out big over the long term.
2. Income From Dividends
Dividend paying stocks pay out a small dividend every month. Although this dividend is normally a small percentage of the total investment it still can be a nice way to receive some extra passive income from the market.
3. Selling Covered Call Options
One of the best stock tips out there is to not overlook stock options. Most people tend to dismiss stock options as risky and simply look the other way. But selling options has a fantastic ability to make you some additional income off of a stock and they can make you as much in a month then dividends will make you in a year.
This strategy is called covered call writing. Covered calls give you some money up front; in return they do give you the risk of getting called out and selling your stock early. But it can be worth it at times.
For example if you sell a $70 call option on a stock that you own which is trading at say $65 you will make some money up front. But if that stock goes above $70 then you will be forced to sell it at $70 potentially missing a big profit. If the option expired before the stock breaks that level however, you simply walk away with the profit and can sell the next month's option if you choose.
There are a few different ways which a stock that you already own can make you money. Ideally an investor would want to find a stock that can make them money in each of these three ways.
1. Long Term Growth
The first way that you can make money from the stock market is from appreciation and growth. Simply looking at how strong the company is and investing into the ones that have strength can be a fantastic long term strategy. Chances are it will pay out big over the long term.
2. Income From Dividends
Dividend paying stocks pay out a small dividend every month. Although this dividend is normally a small percentage of the total investment it still can be a nice way to receive some extra passive income from the market.
3. Selling Covered Call Options
One of the best stock tips out there is to not overlook stock options. Most people tend to dismiss stock options as risky and simply look the other way. But selling options has a fantastic ability to make you some additional income off of a stock and they can make you as much in a month then dividends will make you in a year.
This strategy is called covered call writing. Covered calls give you some money up front; in return they do give you the risk of getting called out and selling your stock early. But it can be worth it at times.
For example if you sell a $70 call option on a stock that you own which is trading at say $65 you will make some money up front. But if that stock goes above $70 then you will be forced to sell it at $70 potentially missing a big profit. If the option expired before the stock breaks that level however, you simply walk away with the profit and can sell the next month's option if you choose.
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