Several investors build their investment portfolio not only to get financial independence but also to gain big dollars and get rich. That is not something impossible. Several people truly get rich from their investment portfolios. Getting rich through the investment portfolio process includes generating money and putting that money to work in additional productive assets.
Earn Interest Income from the Money You Lend
Some investors prefer to lend money directly. These investors usually start in small range communities and towns.
Other investors choose to invest in bonds, issued by corporations, municipal governments, or other entities. The one’s issue that bonds, then, use the money to build schools, hospitals, factories, expand into new markets, launch a new advertising campaign, and many more.
If everything goes well, then the owner will get interest income until the bond matures. Once the bond matures, the owner also gets all the principal paid back.
Collect Dividends from the Business You Owned
Investors can own a part of a business, through shares of big companies, like General Electric or mall business, like the corner drug store. That can give the investor the chance to collect a cash dividend.
That money reflects part of the company profit that the Board of Directors decides to be given to investors based on their stake at the company. The more equity (ownership) an investor has meant more dividends the investor can get.
Buy Shares, Reinvest or Sell Them at Higher Price
When you purchase an asset at a particular price, you can sell it later at a higher price. The profit from that process is called a capital gain.
Business owners usually enjoy capital gain by taking profit from the company and reinvest it into growth. That way the investor can get higher earnings.
You have to understand, that capital gain and cash dividend are not mutually exclusive. Actually, they both go almost hand in hand once the company becomes profitable and well-established.
