Getting Your Share: Seven (7) Ways to Make it in The Stock Market
Key Takeaways
As demonstrated by the billionaires and financial researchers, the world is full of a lot of wealth
Getting one’s share is there for the taking but, this is ‘easier said, than done’
As with other worthwhile objectives, getting one’s own takes a little effort, sometimes a little help,
And,
Most of all, a strategy or plan. (Manner does not drop from the sky, anymore!)
This Newsletter pinpoints seven (7) strategies through which each of us, from any continent, or country on the planet, could seek all, or a part, of our share
In respect of the stock market, in particular, there are many ways to do so.
Trouble is, very few, if any are ordained. That is to say, nothing is by compulsion. There are no guarantees. But, in terms of creating a little wealth for oneself, the experience of many ahead of us demonstrates that, with
- Some understanding of the basic concepts,
- a little help from a wealth advisor
- and a lot of patience,
most anyone can succeed at it.
The concept of Patience is foundational. Depending on when, and how, John Brown (JB) begins, he himself may, or may not reap the fruits of his labour but, if he does not himself, chances are better than good that his dependents will.
THESAME100%
The same 100%
It may be helpful to emphasize another foundational concept before focusing on the 7 ways to make money in the market. Many potential investors stay out of the market because, they say, “My investment will never get to a million dollars like the millionaires who I read about”. And, maybe they are right. Their investment may never get to one million dollars but, the focus in investing is not necessarily to get to that figure. It is, instead, to grow one’s investment so that, at the ‘end of time’ he comes out with more than he put in.
If, therefore a millionaire invests one million dollars and fortune ‘smiles on him’ and he doubles his investment to two million dollars, this is saying that he made 100% on his money. John Brown (JB) does not have a million to invest. He has only $10,000. However, if he invests in the same market as the millionaire and, fortune similarly ‘smiles on him too’ and he doubles his $10,000 to $20,000 he, too, would have made 100% on his investment.
This is the ‘yard stick’ that ‘JB’, and the rest of us, should use to compare our stature as investors vs that of the millionaire. In other words, since both of them (millionaire and ‘JB’) earned the same 100% on their investment, they both have done equally well and, it is this ‘return on investment’ that we should always use to measure, and compare, how the market treats us and all other investors; not necessarily the amount of money that each of us is able to invest
Here are Seven of the ways to make it
1. Dividend Payment
2. Share price appreciation over time (as measured in decades) Microsoft, Apple
3. Stock Splits based on market reception
4. Market dominance
5. IPO Bounce
6. Dividend re-investment plan (DRIP)
7. Recovery from a Bear Market
1. Making it through dividend payment
Two of the big points made in Newsletter #1 are that
- the principles of the market are the same irrespective of market size and, just as important,
- they (principles) are manifested, i.e. work the same way!
It is important to digest 1(a) and 1(b) because, it, too, is foundational. We do not necessarily need a big market in which to make money. When we recognize, and digest this fact, it enables us to understand that, in the stock market, bigger does not necessarily mean better and that, in fact, the yield in some small markets or midsize markets, might even rival, or be better than, those in some bigger markets. Note:
Yield is the favourite measure or yardstick used in the investment market to compare where experienced investors tend to put their investments for better returns. According to www.usbank.com “yield refers to how much income an investment generates, separate from the principal” For our purposes, we could interpret this as “number of cents on the dollar”. See at Concepts to know @ this website.
Bottomline: You and I don’t have to invest , necessarily, in the biggest stock market in our country, or the world for that matter, to earn very attractive yields on our investments.
But what are dividend payments?
Before we get carried away with dividend yield, though, shouldn’t we look at how we could ‘get our share’ from earning some dividend?! So what is a dividend?
Many different people may define it differently
ut, in effect, it is the cheque you and I get from the company in whose shares we invested, or bought. It is not an automatic payment though. In fact, some companies do not even pay it so, if this is one of the seven ways in this Newsletter through which you want to make some money, make sure the company in which you invest is a dividend payer. Interestingly, while some regard dividends as
- a reward for owning a company’s shares,
- others see it as a refund on the purchase price of each share
In the American market
In the American market (biggest in the world) dividend payments as a source of building wealth are a very big issue. So much so that they have their
- Dividend Aristocrats (According to www.nasdaq.com these are companies that have increased the dividend paid per share for at least 25 years
- Dividend Kings (according to www.dividendinvestors.com those that have done the same increase for least 50 years and, even
- Those that have not necessarily increased it but have paid for 100 years or more
Regardless of the interpretation, (and classification 1(e), 1(f0 or 1(g) the important thing is that earning dividends is one of the surest ways through which you and I can build an income stream, and some wealth, for ourselves and, or, our children, grandchildren, and great grands on an inter-generational basis.
PS: In follow up Newsletters, we will look at the other six (6) ways, separately, to make some money through the stock market