Stocks & shares are the most popular and common investments for a lot of people. If you’re looking to start making money from investments, most people point you to the stock market. Here, you can invest in different companies, basically giving yourself a slice of the pie.
Okay, but how do you make money? There’s one very obvious way to use stocks to make money, and two not so obvious methods. We’ll go through them all below!
Buy & Sell Stocks
Naturally, this is the traditional method that everyone should know about. Let’s say you buy shares in a company and the share price increases. Why does it increase? Usually, it’s because the company starts doing better than they were. As a result, the value of your shares is greater than when you bought them. From here, you simply sell your shares for a profit.
We don’t have to talk about anything else for this method; it’s plain and simple!
Get Money From Dividends
Many people don’t know this, but you can make money from stocks & shares through dividend payments. In essence, this is basically like gaining interest on your investment in a company. When the business makes a profit, it gives some of the profits back to the investors. This can happen regularly or as a one-off payment.
The amount you earn will depend on how many shares of the company you own, and how profitable the business is. It’s a much more passive way to make money from stocks, and you can also generate a portion of dividends as tax-free earnings.
Trade Binary Options
Alternatively, you can use a different method that doesn’t get you to invest directly in stocks and shares. Binary options are contracts that pose a yes or no answer to you based on a market. In this case, the market will be the stock market. There are regulated binary brokers, like Trusted Options, that will allow you to place your trades.
How does this method work? It starts by picking a stock, and the aim is to choose one of the two options posed.
Let’s say Stock X is currently trading at $55.75. A binary option will pose the question, will Stock X be trading at $56 by 12 pm tomorrow? You can now choose to buy or sell the option – if you buy, you’re basically saying that you believe Stock X will be trading at this price or above by the set time. If you sell, you don’t think this will be the case.
Money is earned depending on the outcome. In this scenario, let’s say the options are worth either $100 or $0. Options can also be bought for $40. So, if you buy the option for $40, you can make a profit of $60 if Stock X does trade at or above $56 by the set time. If it doesn’t reach the figure, you lose the $40.
So, it’s a risky strategy, but if you get to know the market and watch how certain stocks and shares move, this could be a great option to make money from the stock market without actively investing in any shares.
There you have it; three ways to make money on stocks & shares, two of which you probably never considered before. Feel free to explore different options, but only invest what you can afford!