How can you make money by investing in stocks?

Question by John H: How can you make money by investing in stocks?
I don’t really understand how stocks work and I was just wondering if you can get money investing. Just the fundamentals of how much money you invest and how much you get back.

Best answer:

Answer by rah1420
If you buy 100 shares of stock at $ 1/share (spending $ 100, plus brokers fees) and the stock goes to $ 2/share, you can sell all 100 shares for $ 2 a share and make…. close to $ 100.

You spent probably $ 105 or so to buy it ($ 5 commission)
You spent another $ 5 to sell it (so your total amount out of pocket was $ 110)
but you received $ 200 from the sale, so you made $ 90 on it.

If you hold it, the company could issue dividends – which means they pay every shareholder a little bit per share. If you get a $ 0.10/share dividend, you’d make an extra $ 10 on the stock. (Note that these are all made up numbers.)

It also doesn’t speak to any taxes you’ll owe. Things can get complicated around tax time if you sold stock in that year – it took me about 15 hours to do my 1040 this year, and 10 of that was just dealing with my stock sales.

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