Is Extra Money Flowing Into Your Life?
Is Extra Money Flowing Into Your Life?
Is Extra Money Flowing Into Your Life?
Would extra streams of cash flowing directly into your bank account help fill the gaping holes in your finances? Let's be honest, for all but a very select few, the answer is an emphatic yes. In these tough times, pretty much everyone would be helped by extra income flowing painlessly and regularly into their lives, passive income, the result of your money working harder for you, rather than the typical need for you to work tirelessly for every penny. Passive income can be a huge aid, especially in tough times like these.
One of the most popular sources of passive income in the US, and truthfully much of the world, is from stock dividends, the portions of earnings paid out by large profitable companies. Dividends are a simple way to start generating extra passive income in your life. And you can begin developing that source now!
Many of the world's strongest and most profitable companies pay out dividends to their shareholders. These are normally paid out quarterly, and can range from rather small token amounts, (as is often the case in high-tech and growth companies) to five percent of the share price or more. (This can quickly add up.) If a $60 company pays a 5% dividend per year, that is $3.00 per share flowing into your life. Would you object to being paid $3.00 per share for simply owning a stock? I wouldn't. If you owned 100 shares, you'd be cashing $300 per year in dividend checks. Most importantly, that's $300 you did not have to work for, rather your money worked for you, while you slept, watched TV, or played lawn darts. Another big perk of dividends is, they are taxed at a much lower tax rate than earned income, which means you can spend more of it on you and your happiness. If you have not looked into owning divided paying stocks before, you definitely should. They are worth it.
When seeking dividends, do not go out and buy shares of companies purely for their dividend yields. That can, and often does, result in large financial losses. If you buy shares in a company at $50.00 per share in order to capture the $1.25 yearly dividend, and the company is poorly run, and it's value drops to $30.00, you have lost far more than you made. You threw away $20 to gain $1.25 and that is not a shrewd financial move. Following such a loss, you would then have far less money to invest, and thus far less ability to generate future dividends.
My suggestion is to invest in companies that have strong fundamentals and that you want to own for the long-term, and then enjoy the dividends you receive. Your first priority should always be to buy good stocks in well-run companies, and then also enjoy the dividends you receive as a bonus. If you follow that suggestion, you can do well creating this extra source of passive income in your life.
Jesse S. Cash is a seasoned investor with more than 15 years of experience, and is a member of the National Association of Investment Professionals and the California Business Educators Association. He is the author of the Cashflow The Market Investing Course, http://www.CashflowtheMarket.com, a program focused on teaching a method for pulling massive cash flow out of the stock market, and is a contributing author to the Passive Incomes Blog, http://www.passiveincomes.net/articles
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