Stock trading – Customarily those dividends are paid in cash, probably four times a year, but a stockholder can give a fund a standing order to reinvest them in new shares.

(3)From time to time a fund sells some of the stock from its portfolio. Adding together all of these sales during the year, if the amount the fund receives is larger than it paid earlier for that same stock, the fund has a capital gain, which it passes on to its shareholders as a capital-gain dividend or distribution. The fund pays this distribution in the form of new shares issued by the fund, unless a stockholder asks for cash. Thus, no matter how often a fund sells something from its portfolio, the only way this makes work for its stockholders is that perhaps once a year they receive either cash or a certificate for additional shares. (4)For anyone wishing to invest small amounts frequent ly, mutual funds have exceptionally convenient and varied ar rangements. A buying plan can even be protected with life insurance.

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