Make Monthly Income By Owning Stocks
By Collin Harness
Money does not discriminate. Money is neither good or evil. Just like trees are neither good or evil. It is people’s love of money that can be evil. Money can be used to pay for Malaria nets in Africa or can used to buy cocaine in America. Men and women are created in equal in the eyes of money. The choices that you make about money have a profound effect on your life. If you make sounds decisions with your money will have greater control of the direction of your life. We have all heard that money does not buy happiness. But not having enough money or no money makes life a lot more difficult.
Wealth is another story. First I need to say that wealth is a state of mind. Some people that have a large amount of money act like they are poor and truly have very little wealth. Others that have little money like nuns and priests, but feel very wealthy and blessed. You have to count your blessings if you want to be content In your life.
Wealth is earned over time
If your are reading this you most likely do not have a family trust fund or have cash passed down from previous generations. A fortune is not built overnight. This is not a get rich quick story. Large amounts of money are built over time. Warren Buffett spent a lifetime, investing and building a company that generates value.
Learn to love saving more than spending
You have to have cash in order to make investments and that means not spending that cash on other things. You need cash to make investments. My advice is to take a portion of your monthly income and earmark it for investing in the market and no matter what don’t stop making the investment. You will start to get a thrill from seeing your savings increase each month.
It is also important when investing to do the math. Grab your calculator and keep it close. If you want to learn the language of money you need to know how to do simple math and determine if you are going to make a smart investment.
Word of warning
Don’t take my word for it. It is always wise to do your own research, consult a second opinion or a tax professional when investing in the stock market. But don’t listen to everyone. When you have enough information, make a decisive decision and stick to it.
So how do you earn monthly income by investing in the stock market?
A dividend is a sum of money paid regularly by a company to its shareholders out of its profits.
Not all companies pay dividends. Ex: Amazon, Berkshire Hathaway. These companies choose to reinvest their profits back into the business and increase the stock price of the business. Other companies pay regular healthy dividends. Ex: Exxon Mobil, 3M. Most companies pay quarterly dividends, so 4 payments a year every 3 months. Most companies are not required to pay dividends and it is entirely up to management discretion when and how much of a dividend they pay out.
There are many companies that pay monthly dividends. This is where I focus my investment. 12 payments a year are paid out to individuals via dividends. This is cash companies are paying every month to their owners.
1. The first step is too make a list of companies that pay a monthly dividend and their price. Dividends are paid on a per share basis so the more shares you own the greater the dividend.
2. Sort your list of companies by their dividend yield. Is the amount of money a company pays our relative to their share price. You want a high dividend yield.
3. The more shares you own the more dividend income you will make. So look for low cost stocks that pay high dividends. It is also important to look at how far back a stock has been paying dividends. You want there to be a strong history of dividend payments.
4. Diversify. I advice buying 5-6 different stocks and investing equal amounts of money in each so you dont lose a large chunk of your investment if one stock goes south. This is a balancing act. You want to diversify so your invest is not as risky, but you want to maximize your dividend income buy choosing stocks that pay a high dividend. I would suggest forgoing some profit in favor of a safer diversified portfolio.
5. Dont panic. When the market goes down don’t sell. This strategy requires time. The only way to be successful is to invest for the long term. The market will always rise and fall. Don’t sell everything when the market starts to go down and continue to make investments in times of feast or famine. There is no better time than today.
6. Reinvest your dividend earnings over time. And continue to invest a set amount each month from your paycheck. If you continually reinvest your dividend income year after year your dividend income will rise and compound. If you do that for 20, 30, or 40 years your investment will compound exponentially. Not only will you build a fortune, but your portfolio could pay you enough income to pay for your lifestyle, kids college, vacations, charity, retirement etc. Financial freedom is a beautiful thing.
7. Hopefully every month you are going to be buying shares of stock. In order for this strategy to be successful you need to find the most affordable brokerage account possible. Get the most bang for your buck. Dont pay it all to a brokerage firm in fees.
8. Pay your taxes. Dividends are considered income and require that you pay taxes on them. They are taxed at a lower rate than traditional income. The government will not be ignored and will destroy any work you have done if you dont pay what you are required.
Do not invest all of your savings in this strategy right away. Start with an amount of money are comfortable investing just to see if the strategy works and if you see it working, steadily increase your investment over time. Monthly income through dividends is possible. Your not getting any younger.
Go for it. I believe in you.
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