"War grows out of the desire of the individual to gain advantage at the expense of his fellow man."Napoleon Hill
|
| |
How Do You Rank in The Investing Hierarchy?
Copyright 2006 CashFlow Avenue You probably have heard this saying before - "It is lonely at the top." If you find yourself in this position, then you are probably at the top of your own niche. Our society is made of hierarchies. Most countries are ...
Planning for the Nursing Home Paradox
After years of saving to have enough to retire on, it is ironic when later in retirement the client wants to have as little income as possible, so that they may qualify for reduced rent and services in a nursing home, or for continuing care charges in ...
The Best Of Stock Market Simulation Games
A stock market simulation game is a great way to practice your investment skills before actually investing any "real" money in the stock market. Simulation games are usually played on the internet, where people can experience the thrill of investing in ...
|
|
|
| |
The bulls and bears of the stock market are both tempting and scary to the investors. Speculators are enchanted by the stock market's potential to help them in making quick money with a big M. While those who tread with care and caution, often shy away for fear of losing. However, the stock market is not all about speculative gains or black Tuesdays. It is a place where committed companies look for raising money to fund their activities. Serious investors can actually create wealth not only for themselves, but also for the companies and the nation. A wise way to invest in the stock market is to empower your self with information. You have to know and learn about the company you invest in, from past records and future plans.
Irrespective of what the Wall Street Gurus predict or what the economic indicators like Dow Jones Average say, a simple and foolproof way of knowing that a company is doing well is to keep a track of how much dividend income does it pay to its share holders every year. If the dividend rates have been rising steadily every year, you know you have a safe bet. To benefit from the future prospects of such companies, it is a good idea to rollback the returns into the company. Which means, instead of adding the dividends to your savings, you can invest them in the shares of the same company. That way, you can ensure that the dividends you receive are always higher than what you got last, with a larger number of shares getting added to your investment portfolio every time.
With this kind of an assured investment plan in place, investors with a gambling streak begin to think beyond making a quick gain. While those who were afraid to take risks get wiser.
Let us find out why companies that give ever-increasing cash dividend income are a good choice for investment:
Your Share Holding Goes Up And So does Your Dividend Income.
Your income begins to escalate with your owning more shares every year and the dividend income rising correspondingly.
Your Dividend Income Increases Even If Stock Prices don't.
You are no more at the mercy of the market. Irrespective of what your shares are worth, you keep earning additional cash dividends. In fact, even if the market price dips, you are still at an advantage, as that allows you to reinvest to purchase more shares.
You are not hit by Inflation.
With the dividend income rising every year, you offset the effects of a rising inflation. This particularly provides relief to people who have retired and depend on a regular cash inflow to help them meet their expenses. At this stage one need not rollback the investment into further shares, instead, the cash dividend can be used as a kind of regular pension money.
Start Young
The ingenuity behind this investment strategy is that it protects you from the fluctuations that generally occur in the market. A lower stock market rate only means you buy more to increase your dividends more. It is advisable to start this strategy early in life while you are still working, so that your wealth builds up gradually and constantly over the years. And you are assured of a regular income, as you grow older.
Remember, the success of this proven investment plan depends significantly on the track record of the company you invest in. It should be one that declares a higher dividend at the end of each financial period. A simple way to find that out would be to calculate the dividend yield. You can do that by dividing the annual dividend per share by the price per share. Of course, no investment can be totally free of risks, neither is this one. Keep an eye on the dividend yield, and if that dips, it's a signal for you to opt out of the investment.
|
|
|
|
|
|
|
