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rick183_rick | Will you get rich by just holding stocks and just by receiving dividends? |
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muncie birder
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In general the answer is no, but there have been many cases where in fact people who have bought particular stocks and just held them have grown rich. For example, if you had bought 100 shares of Walmart in the early 80s and held it until now, your investment would be worth 100x the original purchase price. There are many additional examples to choose from.
As one responder mentioned many people sell their stocks when they become expensive, and generally speaking that is a good idea. But with certain stocks, that strategy will actually cost you greatly. What prevents many from getting rich, is just that. They bought Walmart back in the early 80s, but when the stock doubled in price they said, "Holy cow! This stock is twice what I paid for it. I'm going to sell and take my profits." And they do. They as a result they never got rich. |
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cj
 |
.
You could get richER but you still have to pick the right stocks.
Educate yourself and/or get a financial advisor .. http://www.fool.com/shop/newsletters/08/index.htm?t=0&source=
--------------------------------------...
Pepsi — $2,000 invested in Pepsi in 1980 is now worth more than $150,000. You would have started with 80 shares, but by reinvesting dividends, you now would have 2,800 shares.
Philip Morris — $2,000 invested in Philip Morris in 1980 is worth just under $300,000 today. You would have started with 58 shares. Today, thanks to stock splits and reinvesting dividends, you now would have more than 4,300 shares!
Johnson & Johnson — $2,000 invested in Johnson & Johnson in 1980 would be worth close to $140,000 today. You would have started with only 13 shares of stock. Today thanks to reinvestment and splits, you now would own more than 2,000 shares.
You'd have a portfolio now worth close to $600,000, starting with a total investment of only $6,000. And you never needed to add another penny.
Today, your little $6,000 investment is generating $17,000 every year in dividends.
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Best wishes,
pup
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derobake
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Well, the term rich is a subjective term. You will receive income from dividends if you hold a large enough batch of them and hold them for many many years.
Not all companies are currently paying dividends to stockholders. This is perfectly natural. In the case of a start-up company, we often see the company skip dividend payments to reinvest all profits for growth. Investors are cool with this so long as the company's growth leads to large dividends in the future, once the company starts paying them. However, any stock whose price is above zero reflects the fact that somebody thinks this company will eventually pay dividends at some future time.
Ethical companies will eventually pay dividends. No company in their right mind would issue stocks and then say to themselves, "Foolish shareholders! We will never pay them dividends, even to our grave." Eventually shareholders would take notice and a backlash of negative publicity would engulf that company. Not to mention, the board of directors (who are shareholder's liaisons) would take action against the CEOs. Also, that company would never be able to issue any new stocks to raise money. In fact, if a company announced that it would never issue dividends, the price of that stock would instantaneously drop to zero.
The value of an investment is its future stream of incomes, discounted to the present. Capital gains are nothing more than an early recognition, an up-front lump payment, of those future discounted incomes. For if future incomes were not expected to rise, the price of the investment would not rise, and no capital gain would be realized. In a round-about way, dividends, buy-backs, and capital gains are the same thing. They are all income. 3-in-1; the "Holy Trinity" of stock returns. It just depends on the time frame you look at. Capital gains and buy-backs have all the future income paid up-front, while dividends pay the income spaced out over many years. It's just that dividends are the most important, because the other 2 would not exist without dividends. |
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Riya Layne
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It depends on whether the stocks on your portfolio are increasing in value or not. It all depends on how the particular stock is doing in the market and what the expectations are for the future. Consult Yahoo Finance- it's a very good resource adn they also give analysts recommendation of whetehr you should buy, sell or hold.
Dividends are actually not as big a source of profit from investing as are capital gains. You have to know when to buy and when to sell and you can make a ton of money on the spread. |
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Tesoro
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You have to be active. You have to sell your stocks when they become expensive. You can't just buy a few stocks that pay a high dividend % and expect to make money off of them. Dividend paying stocks are not savings accounts. The dividend is not always guranateed and preservation of your capital is not always guranteed. |
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Orion777
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You get rich by mastering the art of compounding your money. Some do this by using real estate, some do this by investing in stocks or mutual funds, others find other ways. The art of compounding, getting and staying out of debt except for a car loan or mortgage payment, living within your means and having a budget and investment goals, always investing extra money instead of blowing it on vacations and non-necessary items, continuing to earn money and seeking ways to make passive income - these are the things that will put a person on the road to riches. |
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Frank Castle
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Yes. |
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walt17jr
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No. If you pick good stocks and hold them for a long time you will probably make a good return. Over a long number of years you will probably only average 10% to 12%. Before inflation. If you are consistently adding to your investments that return will provide you a very comfortable living in later life, but to be "rich" I believe you need to make more than that.
The highest returns are made by trading stocks. You buy before a big run up, making 30% or more in a few months, then sell before it drops. Then repeat. Doing that isn't as easy as many traders won't you to believe.
Regarding dividends, the higher the dividend the less dependable that stock is as an investment. So go for a quality company/stock with a low to moderate dividend over poor stocks with high dividends. |
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