Written by There are two primary ways to make money from stocks: **capital appreciation** and **dividends**.
1. **Capital Appreciation**: This is when the price of a stock increases over time, allowing you to sell it for a profit. For example, if you purchase shares of a company for $50 per share, and the price rises to $75, you can sell the stock and make a $25 profit per share. This profit is realized when you sell the stock at a higher price than what you paid for it.
2. **Dividends**: Some companies pay regular dividends to their shareholders, usually as a percentage of the company’s profits. For example, a company might pay a dividend of $1 per share each quarter. If you own 100 shares, you would receive $100 in dividends. Dividends can provide a steady income stream, especially for long-term investors who hold stocks in companies with a history of paying dividends.
To make money from stocks, it’s important to select companies that have strong growth potential or reliable dividend payments. Additionally, staying patient and holding investments for the long term can help you benefit from compounded returns and market growth.
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