money guidance and how to get rich_122

_{There are two main ways: dividends and price appreciation.}

_{Imagine that you buy 100 shares of International Alphabet Corp. (ticker:}

_{ABCDE) for $50 per share. You spend $5,000 total (plus perhaps $12}

_{commission to your discount broker). Let's say that ABCDE is paying}

_{a $2 per share dividend when you buy it. That means that as long as}

_{you hold on to your shares, you'll be paid $2 for each share annually}

_{— that's $200 per year. Over time, companies typically increase their}

_{dividends. So 10 years from now, you might be receiving $5 per share,}

_{or $500 per year. Each year that you hold the stock, you'll be paid a}

_{dividend. Not every company pays a dividend. This is fine — some}

_{companies are growing quickly and need that money, and they may}

_{more than make it up to you via price appreciation.}

_{Let's look at price appreciation now. Recall that you bought your shares}

_{of International Alphabet for $50 per share. Well, 10 years from now}

_{they may be trading at $130 per share (that's about 10% growth per}

_{year). If so, then they would be worth $13,000. You spent $5,000 for}

_{them originally, so if you were to sell, you'd make a profit of $8,000 (on}

_{which you'd pay capital gains tax). And if there had been dividend}

_{payments all along, that's icing on the cake.}