Shareholders are also company owners, and they can and should stay aware of any potential changes in growth potential or risk of failure, states Forbes. Although it may be tempting to buy stocks at a low price and resell them when the stock price rises, it is important to also consider the long-term potential of dividends, which is a regularly occurring income.Continue Reading
When considering the increase of stocks, it is important to also consider the rate of inflation, to estimate its true long-term value, notes Forbes. When considering the total potential return, shareholders should also remember that dividends and gains from selling are taxed, and plan accordingly.
"Value" investing is when the investor buys stocks when they seem temporarily and unusually depressed, states Forbes. "Momentum" investing is when the investor buys stocks that are on the rise, hoping that other buyers are going to do the same.
Stocks tend to appreciate more than bonds in the long term, but stocks are also more volatile along the way, according to Forbes. It is possible for stocks to fall or rise a significant amount in a short time period. In order to reduce the risk of losing everything if a company fails, some investors choose to own a diverse array of individual stocks, rather than investing in only one company.Learn more about Investing