The Best Time to Invest in Stocks
Investing in the stock market is more significant than these things. Furthermore, your stock market investment strategy should be based on your intended outcomes. For instance, when you invest in stocks, do you hope to earn a profit through dividends or do you anticipate capital appreciation? On the other hand, is the goal of investing in stocks to earn dividends in addition to capital appreciation? Will you be choosing individual stocks or investing in a mutual fund?
Do you put all of your money into stocks and mutual funds at once or do you buy them at varying prices over time, a strategy known as dollar-cost averaging? Is your return on investment (ROI) being maximized, or are you spreading your investment funds too thin? Is there a fee associated with buying stocks? In what ways does your mutual fund handle load fees? What are the 'hidden fees' that your mutual fund(s) incur for things like management, operations, and marketing? (Recently, a mutual fund was fined 450 million for engaging in tactics that were referred to as "hidden fees.") The return on investment (ROI) you achieve from your stock market investments is directly related to the "how" of your investments, rather than the "when" of your investments.
Once you have a strategy in place that considers the aforementioned variables, you may begin investing in the stock market. You and your loved ones should be the only beneficiaries of your investment capital, period.
On Wall Street, there are some very high salaries supported by a tremendous amount of money from investors. In the summer of 2003, Richard Grasso, the former chief executive officer of the New York Stock Exchange, was compelled to step down after the disclosure of his compensation for the previous two years. His compensation has been 12 million dollars per year for the past two years. His advisor suggested that he return a check for 48 million dollars, which he dutifully did. However, as of this writing (mid-2004), he still hasn't returned a pay-package of 139.5 million dollars. Sure, it's good money if you can get it, but that's just one man's income on Wall Street! From where did all of this wage money originate? Pension fund managers threatened to withdraw billions of dollars from the New York stock exchange over Grasso's income. If the money didn't originate from investor dollars, then why were they so outraged? The source of the funds used to pay his salary is completely unknown to me. The one source of income that did not go toward his salary, as far as I am aware, was the stockopoly investor. Completely free!
If it were feasible, I would prefer that there be no commission fees associated with buying stocks. Buying equities should be a long-term strategy, and you should look for companies that have consistently increased their dividend payout. Additionally, until retirement, all dividends should be reinvested, commission-free, into the company's shares. Get the most out of every dollar you spend. If you buy shares in companies with a track record of consistent dividend increases (like Comerica, which has been going strong for 34 years, Procter & Gamble for 47, BB&T for 31, GE for 28, and Atmos Energy for 16 years; on top of that, they offer a 3% discount on all shares bought through dividend reinvestments), the "how" of investing becomes second nature: you just dollar-cost average into your holdings through the dividends paid out by the companies every quarter.
There is no way for a corporation to "fudge" the dividend. In order to pay the shareholder, the funds must be available. A corporation must be doing something well if it can increase its dividend each year. Since a lower stock price for that company simply means a higher dividend yield, investing in a company with a history of increasing their dividend every year is a way to reduce risk. If, for instance, the price of a share of stock you bought for $50.00 suddenly lowers to $36.00, you can get more "bang for your buck" out of your dividends by reinvesting them, and the income they generate accelerates. Over the last 47 years, Procter & Gamble has increased its dividend payment every single year, despite the fact that the stock market has seen numerous ups and downs (I know, I've been through nearly 40 of them).
Presented here are two hypothetical stock market investors, each with $10,000 to their name. The first one invests all at once, while the second one uses dollar-cost-averaging. Unlike the dollar-cost averaging investor, the first one isn't concerned with dividends. Although the "WHEN" and "HOW" of the investors' investments were same, the two groups' methods were distinct. Assume they both put money into the market at the same time, buying $50 worth of shares at the beginning of the year and seeing a $2.00 loss in value each quarter until the stock price slumps to $36 before bouncing back up to $50. The investor who paid all at once bought shares in the hypothetical company ABC, which doesn't pay dividends; the investor who spread out their payments over time bought shares in the hypothetical company XYZ, which has a history of increasing its dividend payment each March for the last 41 years running, pays 50 cents per share quarterly (a yield of 4.0% annually), and so on. January was the month for both acquisitions.
The investor put $10,000 into 200 shares of ABC at $50 per share, saw the stock fall to $36 per share, then rise back to $50 per share, and ultimately ended up with the same amount of money he invested.
A dollar-cost-averaging investor put $5,000 into XYZ in January (the stock pays a dividend of 50 cents per share, for a dividend yield of 4.0 percent annually) and added $1,000 to their holdings each quarter for the following five quarters. The corporation reinvests its quarterly dividends into the equity at a higher price per share. For 45 years running, the business has increased its dividend by 2 cents per share every March. Purchases were made without any commission.
If you buy 100 XYZ shares in January at $50 each, you'll have $5,000. The stock price for one share is $1,000.00. Investment in Dividends Buying Stock
March: $48.00 (equivalent to 52 cents per share) 1,083 shares, or 20.83 percent
June: $46,000 (equivalent to 52 cents per share) 1.378 million shares
August: $44.00 (equivalent to 52 cents per share) 1.714% of the stock
December: $42.00 (equivalent to 52 cents per share) 23.81 shares out of 2,098
March — forty dollars, or fifty-four cents each share 2.637 shares valued at $25.00
Shares costing $38.00 in June (or 54 cents each) $3.169 - $0.36 (equivalent to 54 cents per share) on September $38.00 (54 cents per share) on December 31st, after taxes (-3.393) 3.262% - 0% - March four thousand dollars (56 cents per share) In June, the price was $42.00, or 56 cents per share, out of 3,260 dollars. Shares were 56 cents each, and the price was $3.149 on September. 3.045 - 0 - $48.00 (56 cents per share) in December $50.00 (58 cents per share) in March 2.827 - 0 2.843% - zero
With the dollar-cost-averaging strategy, the investor now has 247,953 XYZ shares. At a price of $50 per share, the value is $12,397.65.
As a result, the initial investment of $10,000 in 200 shares of ABC remains with the lump-sum investor, but the value of 247,953 shares of XYZ, plus dividend income, amounts to $12,397.65 for the dollar-cost-averaging investor. The "when" of their investments was identical for the two.
Divide $50.00 by 4 multiplied by 100, and you get 58 cents per quarter, for a dividend return of 4.64% per year. No matter the stock price at the conclusion of each quarter, the dividend received from the corporation was always higher than the preceding dividend. The investor who uses dollar-cost averaging will receive a dividend of $143.81 from XYZ in the next quarter, regardless of the stock price. If the company maintained their dividend, the dividend would be even higher in the next quarter and every quarter after that. If XYZ and ABC both invested in the stock market using the same strategy (50.00 down to $36.00, back up to $50.00) for the next three years, the outcome would be identical.
The Stockopoly scheme allows investors to buy stocks without paying a commission. No stockbroker is required (all the resources you need to do your own research are readily available, and the book provides the where-and-hows); no load fees, hidden costs, running, administration, or advertising expenses are involved. Despite the loss of tens of millions of dollars for investors, no illicit trading techniques have been detected. (And you won't have to worry about paying for the Wall Street Christmas bonuses.) Increasing cash dividends are paid out to you weekly, monthly, and annually from every cent. Even if a stock is trading at its 52-week high, you should never pay more than it is worth. If you want to be a successful stock market investor, knowing HOW to invest is more important than WHEN to invest.
Learn EVERYTHING you need to know to create a foolproof investment strategy that will provide you and your loved ones with lifelong wealth with the help of the Stockopoly plan.
Visit www.thestockopolyplan.com for additional information and to read excerpts from The Stockopoly Plan.
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Wow, that's funny!
