Earn Investment Income through Dividends and Capital Gains

If you’re currently financially comfortable enough to have a stable savings account or are starting to plan for retirement, you should consider making money through stock market investments. Even if you’re unfamiliar with investing practices now, if you learn the basics of investing, the stock market can be a great resource to earn more money without having to do much more work. Familiarize yourself with dividends and capital gains income to start earning money through investments.

Dividends

One of the best ways to make money off of investments is through earning dividends. Many public companies share a portion of their profits with their shareholders; these payments are called dividends, and they’re based on a company’s earnings each year. Choose a stable company that sees steady yearly growth in which to invest.

The more shares you own in the company, the most you’ll make on dividends, so buy as many as you feel comfortable (or consult an investment professional) to make the most off your investment. If you don’t need to spend your dividends, consider taking your dividend funds and reinvesting them.

Capital Gains Income

This practice is one of the classic ways investors make money. If you buy a stock at a certain price, and later it’s worth a higher value, you can sell your stock at the higher price. You’ve now made more money than you originally spent, turning a profit.

This type of investment can be riskier than investing in dividends; companies that promise dividends are legally obligated to pay their shareholders, but you’re the only one responsible for making a profit through capital gains. However, if you hold a stock for a long time between buying and selling, you’ll likely >strong>pay lower taxes on your capital gains profit than you would for dividends, which saves you money in the long run.

Learning about the stock market is a smart personal decision; investing in the stock market can be a great financial decision. Invest wisely in both stocks that pay out dividends and to generate capital gain profits to supplement your current income.