How People Make Money From Stocks- Animated

How People Make Money From Stocks- Animated New to Stock Market? Confused how people make money from stocks? Watch the video and find out. How People Make Money From Stocks- Animated Whenever a retail investor, like you and me, buys a stock, then their main aim is to earn money through their investment. There are two methods by which anyone can earn money by investing in stocks- Capital Appreciation & Dividends. The first one, capital appreciation, is quite famous among the investors. Everyone knows this secret to earn in stock market. Buy low and sell high. The difference is the capital appreciation or profit. For example, suppose you bought a stock at Rs 100 and two years later, the price of the stock has increased to Rs 240. Here, the capital appreciation is Rs 240- Rs 100 = Rs 140. In short, you made a profit of Rs 140 or 140%. Almost everyone who enters the market knows this method of earning by stocks. Now, let us move to the second method of earning through stocks-DIVIDENDS. Whenever a company is in profit, it can use this profit amount in different ways. First, it can use the profit amount in its expansion like acquiring new property, starting a new venture/project etc. Second, it can distribute the profit among its owner and shareholders. Third and final, it can distribute some portion of the profit to the shareholders and use the remaining in carrying out its expansion work. This amount distributed among the shareholders is called DIVIDEND. So, What is a dividend? A dividend is a distribution of a portion of a company’s earnings to a class of its shareholders decided by the board of directors. Generally, a growing company gives less dividends compared to large established companies as the growing company requires the money for its expansion. On the other hand, the large companies, who is already established, does not require much capital and hence distributes its profits among its loyal shareholders. Nevertheless, you can also earn money in stocks form both capital appreciation and dividends. Many stocks give good dividends along with decent growth in value. For example, HPCL. The stock price of HPCL has risen from Rs 265 to Rs 480 in last one year. In addition, it has also given a dividend of Rs 30 per share to its shareholders in the same financial year. In short, capital appreciation and dividends are the way in which investors make money by stock market investing. That’s all. I hope this video is useful to the viewers.