Make Money and Do NOTHING

Source: www.onmoneymaking.com

As I countinued my research this week, my research led me to discover dividends. Dividends are the easy way for an investor to make a return on his/her stock. After I watched this Dividend Video Explanation on Investopedia, it really helped me get a better understanding of how to explain what is a dividend.

A dividend is defined as a company's net profits that can be allocated to investors so that it is still kept within the company. Companies can than purchase their shares back which is defined as a share buyback. Dividends are the easiest way to get money, you get payed cash to just hold someone's stock. So even if the company's stock isn't doing well, you could keep your stocks depending on how much of a dividend is payed out at the end of their fiscal quarter.

Dividends can affect the price of stocks because more people want to invest in that company; therefore raising the price of that stock and making more people want to buy that stock. Some economists argue that a dividend policy does not affect the price of a stock, this is called dividend irrelevance.

In my opinion as a mediocre investor, I don't research into stocks with dividends. I look at the stocks that continuously set the same patterns in how they rise and fall, or also known as trends in the market. When I see one of my stocks falling, I don't just sell right away, I look into why the price is dropping and from there I either buy more of that stock or sell what I have and try to make up the loses elsewhere. Because of my short-term investment style, dividends are not for me; If you're a long term investor dividends will work for you. Make sure you know what type of investor you are before making any decision with money in the stock market.