Looking back over history, it's safe to say that if you had been a diligent investor in the stock market over the past 25 years and invested in some decent companies it would have fared pretty well.
Everybody of course, would like to find the big blockbusters that go up 300, 400 or even 1000%, over time. You might be one that bought Microsoft or Nike or some other leading companies stock in its early stage and then sold it off after it went up five or ten dollars. If only you could have gone back and just made a simple investment of $5,000 and let it ride for 10 years, you'd be set very nice right now.
The fact of the matter is stocks have proven to be a better investment than many real estate deals or any other type of investment.
So what about when the stock market starts crashing in prices are dropping drastically than what you do? Well, the key to this is how you've originally set your portfolio up in the first place.
Every portfolio should hold at least five to ten nice dividend paying stocks. A dividend is simply a small percentage paid back to the stock owner. Some dividends are paid on quarterly basis, some semiannually and some annually.
The smart way to do this is to reinvest your dividend payments back into buying more stocks of that company. It's basically like playing with House money. The company pays you a small percentage usually around two to ten percent. With the average been around four to five percent paid out in average.
Investing in stocks can be a very risky endeavor. Make sure that you have proper research and can afford to lose the money at your investing. The nice thing about stocks is that your loss is limited to the money you invest. However your profit is unlimited. If you by $2000 worth of stock - The worst-case scenario are that you could lose $2000. However, it's highly unlikely you'll lose all of that money. That same investment could earn you tens of thousands of dollars invested into the right stocks.
Author: Tom Turner
Article Source: EzineArticles.com
Provided by: Smart cooker
