It’s the dream of many investors to live off of the money they make in the stock market, whether it’s their savings, investment income, or gains from stocks and mutual funds. But if you’re looking to turn your investing hobby into an active income stream, you’ll need to know how to make money in the stock market. Follow these 4 tips, and you’ll be well on your way to joining this exclusive club! The buy-and-hold strategy: The buy-and-hold strategy bears fruit with less volatile stocks, rewarding investors with impressive annual returns. It remains recommended for individual investors who have the time to let their portfolios grow, as historically the stock market has appreciated over the long term. That means you have to stay invested for the long haul to make sure you capture the stock market at its best. Adopting a buy and hold strategy can help you achieve this goal. By using Algorithms: Making money in the stock market is easier than keeping it, with predatory algorithms and other inside forces generating volatility and reversals that capitalize on the crowd’s herd-like behavior. While history tells us that equities can post stronger returns than other securities, long-term profitability requires risk management and rigid discipline to avoid pitfalls and periodic outliers. Dividend: Many businesses pay their shareholders a dividend—a periodic payment based on their earnings. Dividends are simply payments made to stockholders on a per-share basis. Usually, dividends are paid in cash but occasionally a company may issue a stock dividend (you would be given more shares of stock usually based on a percentage). Some companies issue dividends on a per-year basis while the majority of companies issue dividends quarterly. Most companies that pay dividends have DRIP (dividend reinvestment) plans. These plans allow you to sign up to have your dividends automatically reinvested in more shares of stock. Choose the Right Investment Account Though the specific investments you pick are undeniably important in your long-term investing success, the account you choose to hold them in is also crucial. That’s because some investment accounts give you the benefit of certain tax advantages, like tax deductions now (traditional retirement accounts) or tax-free withdrawals later (Roth). Whichever you choose, both also let you avoid paying taxes on any gains or income you receive while the money is held in the account. This can turbocharge your retirement funds as you can defer taxes on these positive returns for decades. Introducing Infinite trading academy is share market classes in pune that provide the facility to create a free demat account with lifetime back office support.
