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How to earn through stock?

easy to make money through Malaysia stock?

Now, thanks to your ability in doing a successful investment, you will be rewarded in two ways:

1. Dividend payout

Certain companies are very generous and they take good care of their shareholders. When the company make profit, the management team will allocate an amount of profit to be distributed back to the shareholder. This kind of profit distribution is known as dividend. Normally, blue chips counters pay out dividend constantly.

For an easier understanding, dividend is actually quite similar to Fixed Deposit rate offered by bank. Every year, instead of receiving a FD rate of around 4% for your investment cost, now you can even enjoy up to 7% dividend annually. This means that for your initial investment, the interest you are getting yearly has nearly doubled.

To see how dividend yield is calculated for a real stock, please read more here.

2. Capital gain

On the other hand, some companies seldom pay out dividend. The management thinks that it is wiser to reinvest the profit back into the company for future expansion work. This scenario normally happened for growing stock that are still trying to develop and expand their market share. Hence, they would like to have more free cash flow for their operation. While holding this kind of stock, we will not be able to enjoy its dividend. So, here comes the second method in earning through stock: capital gain.

Capital gain is basically the profit obtained when a bought stock is sold out at a higher price. For instance, if you bought stock ABC at RM1 on 3rd of January 2016 and sell it at RM1.50 on the 21st of January 2016, you have earned RM0.50 for each stock ABC you have. This is what known as capital gain.

To see how capital gain is calculated for a real stock, please read more here.

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