Stock Markets Exposed - If you buy and hold....and hold...and hold...?

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?

Public Comments

Essentially the only profit you will have is the net difference between selling and buying prices, the ups and downs are just the process....the same goes with the price of your house, if the value goes up tomorrow you don't get anything right? unless you sell it... some people make "monthly" income by investing actively, the profits are still the net difference between sell/buy, but they just do it faster than you do, and yes the risk is much bigger because speculation plays a bigger part of it, buy if they are good at it, then they can make money faster (some people like me don't like to sit on it for 15 years...that's for 9 to 5pm ppl hehe...) honestly though, if you can't commit to spending a great amount of time thinking about your stock, its better to do the 15 years. It curbs your daily (wasteful) spending, and prepares you for your far future (perhaps kid's college fund) But remember, you have to beat inflation (its not a profit if you get 20% over 15 years and inflation is 50%)
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.
If you buy and hold a diversified, high quality portfolio of stocks, history has shown that over any time period of twenty years or more over the last centuruy, you would have had a handsome increase in wealth (because of rising stock prices as well as reinvested dividends). Now let's look at the opposite of long-term investors: History also shows that the vast majority of short-term traders lose money and eventually quit, after losing most if not all of thier fortune. What do you invest in to achieve diversification and keep your transaction costs as low a possible? I strongly prefer no-load mutual funds (funds that carry absolutely no commissions or sales charges as opposed to the ones peddled by salesmen) sold directly by the mutual fund to investors. The fund families I especially like are Vanguard, Fidelity, and T. Rowe Price. One specific suggestion that I would make to my own best friend: Vanguard Total Stock Market Index fund. Of course, over shorter periods of times, stocks fluctuate, often without rhyme or reason. Stocks fluctuate. Get used to it. But over the long-term, stocks tend to rise. Period. Educate youself at www.vanguard.com and then empower youself by investing in a top quality Vanguard index fund. Call Vanguard. information available at www.vanguard.com
you can actually make a living by selling stocks when they are high and buying them when low but it requires an intricate knowledge of the stock market.It's called Day trading.Caution is advised however start small and get expert advise.
When I first got into the stock market, I bought stocks of companies I "knew" about. For example, I drink Pepsi (like the product), use alot of Johnson & Johnson products, LOVE Disneyland, you get the idea. All those companies have "dividend reinvestment plans". Any money made as dividends went "back into the company" (instead of getting a quarterly dividend checks, the money was reinvested to by more of the companies stock)It's a great way to get started. So you're not just buying & holding but your accumulating as well. Try www.dripinvester.com
1) Yes. 2) Yes.