What is dividend reinvestment?

When you receive a small dividend check from a stock you own, you’re probably tempted to spend it on a latte. Dividend reinvestment plans enable you to automatically buy more shares of stock with those small amounts. Over the years, your dividends will buy many more shares than you have now. Each of those new shares pays dividends and will help you build a portfolio. Before signing up, ask about any fees the plan charges.

You must own a share of a company’s stock to sign up for its dividend reinvestment plan, assuming it has one. There are even companies that permit you to buy your first share of stock directly, so you can get started right away with a dividend reinvestment plan.

What is the difference between a bull and bear market?

“Bull market” is the term used to describe the stock market when investors are optimistic and share prices in general are increasing. Even though the stock market may have days when it goes down, a bull market might last years. When a “bear market” is in progress, investors are pessimistic. Even though stocks might trade higher over the course of weeks or months, the trend is downward during a bear market. Always remember that the markets and the prices of any individual stock do not always change the same way. As a result, even if you’re in the middle of a bull market, the price of any individual shares you own may go down and you might lose money if you sell.

What is a blue chip stock?

The term “blue chip” comes from poker. In poker, blue chips are the most valuable. Similarly, the most consistently profitable companies are referred to as blue chips. Even if you only invest in blue chip stocks, there is no guarantee that your investment portfolio will do well.