I understand buy low and sell high, but then what?
If, say the S&P500, keeps growing there is no ‘peak’ to sell at. Do the gains compound? if so how? Or do you just hold it forever and sell when you want to get the money?
In: Economics
There are various ways to make money. One is dividends. Many companies give a share of their profits to the shareholders via a dividend. For example, Ford pays a 15 cent per share dividend a quarter. So if I own 10 shares of Ford, I will get $1.50 from them every 3 months. Though it’s important to note that a dividend is not guaranteed and companies may choose to stop or reduce it. But most companies try to keep their dividend steady and slowly increase it over time. Companies in the S&P pay on average about a 2% dividend per year.
As for the long term money from stocks, this is buying low and selling high. If I buy $1000 of the S&P today, and I sell it in 20 years for $5000, then I’ve made $4000. I don’t know when the best time to buy or sell is, but if I assume the stock market always increases long term, then now is a good time to buy, and the future will be a time where I can sell for a profit.
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