For some people, investing in the stock market involves risks that
they are not willing to take, but stock market investing does not have
to require great risk to provide a great return on investment.
Successfully Investing in the Stock Market takes a long term,
disciplined approach. Buying a stock, only to sell it when it increases
slightly in value is taking an unneeded risk with your money. All
investment in the stock market involves some risk, but with research
and careful investment you can minimize that risk.
The right research can help you make an informed decision. An
informed decision can help you make the right choice when you are
seeking a higher return in investment that is available in a passbook
savings account, mutual fund or certificate of deposit.
The main reason to invest your money in the stock market is to make a
return on your investment. With sound investment decisions you can
receive a steady income that increases every quarter. Once you have
established your short and long term goals, it is easier to make the
correct decisions to reach those goals.
To ensure a steady cash income, each stock that you own must do two
things. The first thing that the stock must do is provide quarterly
cash dividends. The second thing the stock must do is take the cash
dividend and reinvest it by buying more shares of the stock. By
providing cash dividends and reinvestment options, your stock portfolio
will grow each quarter, providing you with an increasingly high cash
income.
Of those companies that provide cash dividends, you must look for
the ones that have a proven history of providing higher cash dividends
every year. By providing higher yearly cash dividends and reinvesting
those dividends, you are helping your portfolio to grow at a rate
that will help combat the effects on inflation. Resist the temptation
to withdraw your dividends to provide for household expenses.
Withdrawing your dividends significantly impairs your plan’s ability
to make your momey grow.
Another way to help your portfolio grow is by choosing to work with
companies that are commission-free. Quarterly commissions can eat into
your dividends, reducing the amount of money that is able to be
reinvested and diminishing the number of stocks that your dividends can
purchase. Each share that your dividends purchase provides extra
income that can in turn provide more dividends. Commissions can break
this positive investment cycle.
You can greatly minimize the effects of stock market price
fluctuations by wisely investing in a long term stock plan. By avoiding
commission fees and letting your dividends work for you by reinvesting
in additional stock your stock investment plan can provide you with
an increasing cash income without the same amount of risk that is
traditionally associate with stock market investments.
|