How To Make Money Dividends

If you buy and hold….and hold…and hold…?

If you buy a stock, invest in a mutual fund, etc….and deposit money into your investment account every few months…and you hold for say, 10-15 years, when are you earning the dividend? I mean that, if the stocks value goes up and the price of the stock goes up, you have profited, but when does this money come into your hands? Is it when you sell the stock, or with every up and down…..if I were to cash out in 10 years, my profit would be based on only the selling price at that time and the initial buying price, right? So the ups and downs will not factor into my dividends as long as there is a steady and slow growth over the years? I know this is a basic question with a simple answer, I am new to the world of investing and still learning…Basically what I want to know is, if you buy and hold, you won’t earn til you sell at a high price, correct? How do some people make money monthly from investing, is it because they simply trade/speculate on a short term basis?

Q.If you buy a stock, invest in a mutual fund, etc….and deposit money into your investment account every few months…and you hold for say, 10-15 years, when are you earning the dividend?

A.You’ll receive dividends only if the company pays them. If you are unsure if the company pays dividends, go to the investor relations section of their website or look it up via quote services (ie yahoo finance).

q.if the stocks value goes up and the price of the stock goes up, you have profited, but when does this money come into your hands? Is it when you sell the stock, or with every up and down

A.You will realize a gain or loss only at the time that you sell your position.

Q.if I were to cash out in 10 years, my profit would be based on only the selling price at that time and the initial buying price

a.When you purchase the position, that is the cost basis you will use at time of sale. If you invest monthly, then you can either keep track of each transaction and then average them out to establish your cost basis. This is something that you can ask your accountant or broker for specific details.

q.Investing is speculating – you are hoping that the price goes up.

Don’t listen to people brag about how much they’ve made – they’ll never tell you how much they’ve lost.

A piece of advice? Don’t fall in love with your positions. If you have a position that is losing money, say certain percentage of your initial investment – DUMP IT. You need to look at your risk tolerance and decide how much loss you can handle.

Cramer: NOV’s a Buy, Even Without Dividends