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A Stock Market
Investment Plan that never lets you down
|The bulls and
bears of the stock market are both tempting and scary to the
investors. Speculators are enchanted by the stock market’s
potential to help them in making quick money with a big M. While
those who tread with care and caution, often shy away for fear
of losing. However, the stock market is not all about
speculative gains or black Tuesdays. It is a place where
committed companies look for raising money to fund their
activities. Serious investors can actually create wealth not
only for themselves, but also for the companies and the nation.
A wise way to invest in the stock market is to empower your self
with information. You have to know and learn about the company
you invest in, from past records and future plans.
Irrespective of what the Wall Street Gurus predict or what the economic
indicators like Dow Jones Average say, a simple and foolproof
way of knowing that a company is doing well is to keep a track
of how much dividend income does it pay to its share holders
every year. If the dividend rates have been rising steadily
every year, you know you have a safe bet. To benefit from the
future prospects of such companies, it is a good idea to
rollback the returns into the company. Which means, instead of
adding the dividends to your savings, you can invest them in the
shares of the same company. That way, you can ensure that the
dividends you receive are always higher than what you got last,
with a larger number of shares getting added to your investment
portfolio every time.
With this kind of an assured investment plan in place, investors with a
gambling streak begin to think beyond making a quick gain. While
those who were afraid to take risks get wiser.
Let us find out why companies that give ever-increasing cash dividend income
are a good choice for investment:
Your Share Holding Goes Up And So does Your Dividend Income.
Your income begins to escalate with your owning more shares every year and
the dividend income rising correspondingly.
Your Dividend Income Increases Even If Stock Prices don’t.
You are no more at the mercy of the market. Irrespective of what your shares
are worth, you keep earning additional cash dividends. In fact,
even if the market price dips, you are still at an advantage, as
that allows you to reinvest to purchase more shares.
You are not hit by Inflation.
With the dividend income rising every year, you offset the effects of a
rising inflation. This particularly provides relief to people
who have retired and depend on a regular cash inflow to help
them meet their expenses. At this stage one need not rollback
the investment into further shares, instead, the cash dividend
can be used as a kind of regular pension money.
The ingenuity behind this investment strategy is that it protects you from
the fluctuations that generally occur in the market. A lower
stock market rate only means you buy more to increase your
dividends more. It is advisable to start this strategy early in
life while you are still working, so that your wealth builds up
gradually and constantly over the years. And you are assured of
a regular income, as you grow older.
Remember, the success of this proven investment plan depends significantly
on the track record of the company you invest in. It should be
one that declares a higher dividend at the end of each financial
period. A simple way to find that out would be to calculate the
dividend yield. You can do that by dividing the annual dividend
per share by the price per share. Of course, no investment can
be totally free of risks, neither is this one. Keep an eye on
the dividend yield, and if that dips, it’s a signal for you to
opt out of the investment.
About the author:
James Marriott is a finance writer with more than 15 years of
experience in writing financial content, including those related
to credit cards, mortgages, stocks, investments, and funds. He
has been with RNCOS, a premier financial writing services
company, for 2 years as head of financial writing. He is also a
regular financial columnist with renowned business journals. For
your comments on the article and further financial assistance,
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