When deciding to begin investing in stocks or bonds, part of the equation of whether to do so or not to invest is the “return on investment” or ROI.

In the days of yore, this was a much simpler calculation and it was easier to determine which stocks to invest in and which ones to not. Because in olden days, most stocks issued dividends regularly in which to mark the return on the investment.  This was great for retired individuals, as companies tried to maintain consistent dividend levels.  People could count on their dividends to assist in paying bills.

Now stocks like Alphabet and Amazon (Apple before 2011) do not issue dividends.  They keep the profits in house and your return on your investment is the appreciation of the stock.  Since all profit is unrealized until the sale, there is nothing to live off of.  The sale would at least be a short term or long-term capital gain, taxed at a lesser rate that ordinary income.

Makes creating income streams interesting.

Pin It on Pinterest