Did you know there are ways to get some passive income in the stock market while investinng for the long term? Getting a cash flow off of an investment that you own is always a nice thing and can help to make it feel like it is actually an investment.

So how can you actually get money off of your stock? The first method is to buy dividend paying stocks. With dividend stocks the company is actually paying you a percentage of their profits based on a few factors such as how much of the company you own.

An investor can get an idea of how much they can make off of their investment by using the dividend yield. This helps an investor to determine how much the dividends where on the stock in the past.

So if the dividend yield ratio was 8% then an investor would expect to receive an extra 8% of what they invested into the company as a passive income each year. So if an investor put in $10,000 they would expect to receive an extra $800 in passive income from the stock that year.

Unfortunately you do need a lot of money to make anything worthwhile with this kind of investing strategy.

The good news is that there is one other way that an investor can make some cash flow from a stock. This strategy is covered call writing and can be extremely profitable.

What happens when an investor writes a covered call is they give someone else the right to buy their stock from them at a specific price on or before a specific date. If the other investor doesn’t exercise their call within that time period the person who sold it walks away with the premium they have made.

But if the option buyer does exercises their call the seller of the option will be forced to sell their stock. It does have some added risks, but it can definitely be worthwhile.