Aug 23

Are there any safe investments today? 3

When selling stocks, you don’t necessarily lose money just because its sale the price is lower than when you bought it. Tax accounting aside, you lose money only when the difference between buy and sell price is more negative than the total you earned in dividend income.

If you do not earn dividend income, then you can make money via short selling: sell shares you don’t own, buying them later from a different seller at a lower price, and delivering them to your buyer.

If not a short sale, and not through dividend income, then the only way buying and selling stocks can make you money is if you buy at alower price than what you sell.

Yet, since EVERYONE is trying to buy low and sell high, you have an extremely SMALL chance of success with this strategy.

The longer you hold a stock that is paying dividends, the lower its final sale price can be and, overall, you are still a winner. To account for income taxes, though, you will need to earn dividends far longer, depending on your tax bracket.

Thus, bulls point to dividends as to why to go long, but share price needs to maintain significant value on that final sales day, even decades from now, or you will effectively ‘wipe out’ all of that dividend income over the years.

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