In today’s post, I am going to answer the question of how do you make money in the stock market. There are a couple of different ways in which someone can make money and I will go over each one. If you find this post helpful then please send it to a friend that would also benefit from reading this post.
I want to also note that I am not including Roth IRA’s or 401K because this post is about how do you make money in the stock market.
Long Term Investing
In this option to making money, the goal is to invest your money in EFT’s or big company stocks that will grow over time. You will be the person that holds and constantly invest until the day you decided to retire and sell everything that you own. The things that you have to deal is a stock market crash (obviously) or simply just companies going out of business. Stocks long term always go up and as long as you are constantly investing money, you will have a good retirement.
Some ETF’s that you can consider investing in is QQQ, VIG, VIGI, BND, VTI, VXUS, VOO, etc.
Day trading is all those ads you see on YT with fake guru’s telling you that they have the secret on how to make a lot of money in the stock market. On a serious note, This option involves a person buying a stock while the price is low and selling when it trails high enough to make some profit on the same day. I know that this is my opinion, but I don’t advise attempting this because you can lose money really fast and your profit gains are not amazing at all.
To become a day trader requires having a lot of money to avoid losses and doing lots of research (aka luck..). You could also just lurk on Reddit to figure out what people are trading and see their journey before you go losing money.
Call And Put Options
In this way of making money in the stock market, you are buying contracts and selling the premiums. If you are betting for the stock go to then a call option would be the way to go. If you have a feeling that the price is going to drop then a put option is what you would buy.
When the value of the contract increases, you will be able to sell that contract for the premium that its worth. What needs to be noted is there must be buyers wanting that contract if you intend to make money. Another thought to remember that a contract that cost $0.09 actually cost $9 because you are exercising your right to buy 100 shares if that contract reaches the target price.
For example, I bought 3 put options of Target for 0.16 per contract (which equals $16 per option call) and sold for $0.34 per contract. I will be writing a future post about my gains from doing option calls
The last option that I am going to talk about is dividend stocks. The benefit of investing in these types of stocks is that you will get paid for owning shares. It can range of a couple of pennies per share to a couple dollars. I really enjoy investing in dividend stocks because you can see it as passive income.
For instance, the stock DIV is paying me $0.43 for owning 4 and a half shares each month. Since I use Robinhood, that money is reinvested into more dividend stocks. Compounded over a period of time, I hope to grow my dividends to $1,000 a year and if I make a lot of money then $1,000 a month.
Anyone can do and I highly suggest you start today and stop procrastinating. As you can see above, there are many different ways to go about making money in the stock market (ignore day trading) and aim for investing long term!
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