For example say someone invested $300 in stock A. One day the total balance in account is 297 and next day it is 303. How does interest earned work in stocks / ETF’s?
In high yield saving account it’s paid monthly but how does it work in investing like in a taxable brokerage account.
Is all the interest earned in investing paid out monthly and that amount paid out monthly is permanent?
In: Other
You don’t earn interest on ETFs or stocks. There are two ways to make money from owning stocks:
1. You sell it for more than you bought it
2. The company pays out a dividend. This is a “on X date, we will pay all of our shareholders Y cents per share” type deal, not a compounding percent like interest (you could re-invest the dividends to buy more shares and then *if* the company issues another dividend later you’ll have more shares so it can compound that way, but it’s not like a bank account)
It doesn’t, stocks don’t pay interest. You are not lending out money, there are no guarantees on returns. If the business goes well the value goes up and you may have dividends to look forward to, if the business goes poorly the value goes down and you can suck your thumbs. Owning stocks is owning the company and getting all the risks and benefits associated with that.
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