Making an Income Steam From Your Long Term Investments
Investing into strong companies can help you to make a decent profit in the market in the long term. However sometimes it is great to get a little extra cash flow now.
Below I have listed a few of the different ways which you can make a short term income off of your long term investments.
1. Investing into Stocks that Pay Dividends
Some stocks will pay out a monthly dividend to their investors. This is simply a small monthly payment that is made and is suppose to represent a company sharing their income with their investors.
There is just one problem here. If you want to make a lot of passive income this way you are going to need to buy a lot of stock. That is because stocks typically pay out between 1-10% of their stock's value in dividends per year. But luckly there are other ways to make an income from your long term investment.
2. Using Covered Calls
One more powerful way of making money in the stock market is to sell covered calls. This allows you to sell another investor the right to buy your stock from you at a specific price and make a premium for it. For example say you own stock XYZ and it is trading at $63. You can sell the $65 call and make money up front.
The only disadvantage here is that you will be obligated to sell the stock early if it goes above $65. It can be a great way to make an income, but only if you are willing to part with your stock.
3. Sell Puts
Another way to make money would be to sell a put. This means you are getting paid to be obligated to buy a stock in the near future. If you sell the $30 put on a stock that you want to own then you will make money up front and end up getting into the trade if the stock closes below $30 before expiration.
Article Source: FxTradingStock.com
About the Author
Combining naked puts and covered calls with fundamentally strong stocks paying dividends can help you make cash flow now and long term growth later.
by: Shaun Rosenberg
Total views: 28
Word Count: 345
Date: Fri, 21 Jan 2011
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