The stock market has been a very powerful way to make money in the long term. However, buying a stock and hoping it goes up is not the only way to make money from your security. Here are 3 ways that you can make money on stocks that you own, all investors can stand to benefit from them.
- Appreciation
Of course the most powerful way of making money from your stock could potentially be the appreciation. Looking at the past the average stock market return tends to be somewhere around 10%. This by itself beats CDs, Bonds, and a wide variety of other investments.
Also by looking for the best investments out there you can potentially find the ones that give you a much higher return.
2. Dividends
A company can choose to pay their shareholders a portion of their earnings in the form of dividends. When the shareholders get dividends they take on no additional risk, but they are able to get a monthly income. Many dividend paying stocks can be pretty powerful because they are consistently paying off a nice return.
Looking to see how much a stock is paying in dividends before investing into it can really increase your overall return.
3. Writing Covered Calls
Covered call writing is often overlooked because it has to do with options, but that does not mean it isn’t extremely powerful. On the contrary, if you consistently selling them it can be a pretty powerful way of making some extra money off of your investment. There is only one disadvantage, you are taking on the risk of selling the stock you own.
When you sell a call you give another investor the right to buy it from you at a set price by a certain date. So if it happens to make a huge move you might end up selling it and missing much of that move. But even with this risk, covered calls have a huge potential and may even prove to be more profitable than the other two put together, especially if the stock you are in is not a big mover.
