Imagine if your piggy bank had 10 candies in it, and every day someone comes by and takes away a candy until there are only 1 or 2 left. You can't save enough money in your piggy bank to buy anything big, like a bicycle or a video game.
So instead, people use their money to buy "shares" of a company, kind of like putting candies in a different kind of piggy bank. When a company is doing really well and making lots of candies (profit), they might give some of the candies to the people who own shares of the company. This is called a "dividend."
Now, imagine if the person taking candies away from your piggy bank is your parents, and they decide to take fewer candies away each day. This means your piggy bank fills up with more candies faster, so you can save enough to buy the bicycle or the video game you wanted.
This is kind of like what happens when interest rates go down. The banks, who are like your parents, take fewer candies away (less interest), so your piggy bank fills up with more candies (money) faster. This makes people want to buy more shares in companies that give out candies (dividends) to shareholders.
So when interest rates go down, some people might sell their shares in companies that don't give out candies, and buy shares in companies that do. This is called "dividend investing," and it can be a good way to grow your money when interest rates are low.
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Source: https://www.benzinga.com/article/27461575/lock-in-these-high-yield-stocks-for-the-rest-of-2024
Date: October 14, 2024
Link: https://www.benzinga.com/article/27461575/lock-in-these-high-yield-stocks-for-the-rest-of-2024
View Source: https://www.benzinga.com/article/27461575/lock-in-these-high-yield-stocks-for-the-rest-of-2024
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