Of primary importance for new DIY investors is the need to understand that dividend payments are a distribution of company profits back to their shareholders. Dividend payments are typical of more mature companies who hope to make up for less movement in their stock price with these quarterly payments whereas growth oriented companies will plow their profits back into company (in the form of research and development or new facilities) to drive their stock valuation higher.
Trading Fees Can Rob Profits - Here’s some advice on buying and selling that I learned the hard and expensive way. Too many new DIY investors want to plunk down $5,000 – $10,000 in cash to start their new account. Initially, it may sound like paying only $10 or less to buy and sell a stock is a bargain, but those costs can add up fast. So begin with the end in mind; don’t just buy up a bundle of popular names with no plan or cost analysis to exit.
Source: Forbes
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