How do you actually make money from stocks,index funds etc?

Question

For stocks, do you just buy them and hope that they go up in value? I heard that some stocks pay you money annually just so you have them. What about index/mutual funds? Also, could you give examples of such stocks/funds.

Answer 1

Essentially, yes, you just buy them and hope they go up in value. In the long run, the stock market goes up a bit each year, so eventually your stocks are quite likely to be worth more. There are other ways, plenty of other ways, to make money in the stock market, but it gets complicated. You can also try to be a day trader, but it takes serious dedication and a fanatical devotion to financial news to try to discover stocks that are about to swing up or swing down, and it's dangerous and easy to lose your money.

Index funds just buy a selection of stocks that correspond to whatever that index has in it - say, the Dow Jones or the S&P. Those indexes track a certain number of stocks, and index funds spread your money across those same stocks. They generally do pretty decently. Again, though, you may have to play the long game to make a lot of money.

Some stocks do pay dividends quarterly or monthly. They're usually larger companies. Don't expect to get rich that way, but it's a nice little bonus. Most of the oil companies pay dividends, as do the railroads. There's a few stocks that are specifically tailored for dividends, like HYI.

Answer 2

There are two ways to make money with stocks - you can buy the stock to own part of the company and the company will pay you part of the profits because you own part of it - these are called dividends.
Or you can buy the stock expecting it will go up in value, either because the company is successful or because you believe in trends in the market. It it goes up in value, then you make money when you sell it.
People who play the market think they have a method of figuring out when a stock will go up or down in price, based entirely on previous pricing and they ignore the value of the company.
An index fund buys various stocks based on some rule - such as matching the stocks in the Dow Jones Stock average. You buy the fund to spread your risk because you can't afford to by 100 shares (or 1 share) of every stock, so you buy 100 shares of the index fund and own 0.001 share of each part.
If you had the money, then the best policy is to own a variety of stocks so that if one has a lot of problems (hurricanes in the Gulf or arabs crashing your planes into buildings) the other stocks might not be affected.

Answer 3

The annual payment you are referring to is called dividends.

Yes, the gist of stocks or mutual funds is that you are buying them for one price in the hopes that they increase in value, in which case you sell them to someone else who thinks...

Answer 4

you invest your money in lets say.. Apple (AAPL) [which i doubt cause its like $170 per share] if the stock is up that day the money value increases but you won't physically get the money unless you sell the stock.....i.e. i invest in AAPL and buy 100 which it being $170 i would invest 17,000.. the next day it goes up $2.31. you multiply your number of shares buy how much it went up so i would have made $231

Answer 5

The Motley Fool website is a subscription-based educational site about money and investing. They also have forums in different areas.

http://www.fool.com/school.htm?ref=G02A06

http://www.fool.com/

Answer 6

Look into bidz.com

Answer 7

...long term...buy and hold and the rest will take care of itself.