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The effect of dividends on stock price - Coursework Example

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Investment means the use of your intelligence, knowledge and skill to make your money earn more money so that your invested capital snowballs over time into a sizeable fortune. It requires time, patience and systematic work. Over a period of time, most investors become reasonably healthy, while some of them even succeed in becoming enormously rich…
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The effect of dividends on stock price
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You must also have -a run of consistent good luck. Sudden wealth and big windfall gains depend more on luck, less on skill and knowledge. J. Paul Getty1 was -one such outstanding example. He became the world's richest man and accumulated a vast fortune of over U.S. $ 2 billion but it took him over fifty years of consistent and steady investing to do so. It would be useful for you to ponder over what he says: "Get-rich-quick schemes just don't work. If they did, then everyone on the face of the Earth would be a millionaire.

This holds true for stock market dealings as it does for any other form of business activity. Don't misunderstand me. It is possible to make money and a great deal of money-in. the stock market. But it can't be done overnight or by haphazard buying and selling. The big profits go to the intelligent, careful and patient investor, not to the reckless and overeager speculator." (Navjot 57) In the investment market, the heart of the investment process consists of selection, timing, and price.

It is all a question of selecting the right company, buying shares in it at the right time and price, and subsequently selling them at the right time and price. . That will depend on the following four factors:(i) The amount of money you initially invest;(ii) The period over which the money is invested;(iii) The rate at which the invested capital appreciates in value; and(iv) The income you receive from your invested capital during this period. Therefore, to achieve investment success you should keep these four factors in mind while taking decisions on selection, timing and price.

But this is not all. Successful investing goes for beyond selection, timing and price. It involves the setting of personal investment objectives, formulating an investment plan and adopting a suitable investment strategy. The overall objective of every investor is to make money. To go further, it is to make of every investor is to make money. To go further, it is to make money at a rate that beats the rate of inflating. In other words, the board objective of all investment is to increase, or at least preserve, the purchasing power of invested capital.

For a successful investor it is necessary to have a well-defined plan, backed by a carefully conceived investment strategy. This will help you to keep your impulses under control and reduce the subjective element in your investment decisions. A good investment plan is by itself not enough to guarantee investment success. Sometimes, even the best investment plans have flaws, and go awry when implemented in practice. But the fact that you have a plan will stack the odds in your favor and give you a fair chance to win.

A well-conceived plan will improve your average results and raise your general level of performance.INVESTMENT PRINCIPLESThe art of successful investment rests on the foundation of certain basic principles, which generally hold good for all times and places. Moreover, these

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