Recently, many people have been asking me how to make money in stocks. Honestly, this is a good question because many people actually don’t understand why they are buying stocks in the first place.

I'll be straightforward: there are basically three ways to make money from stocks. The first is to buy stocks and hold them, waiting to receive dividends; companies like Coca-Cola do this, paying dividends to shareholders every year. The second is to buy low and sell high to profit from price differences, which everyone understands. The third, less known method, is to lend out your stocks and earn lending income.

But here’s a special reminder: dividends are not free lunches. The amount of dividend paid by a company will be reflected in the stock price the next day, so you need to see if the stock can "fill the dividend," otherwise it’s just a hand-to-hand exchange. Also, pay attention to tax issues—dividends from U.S. stocks are directly taxed at 30%, which is a significant cost. Another pitfall is fake dividends; some companies pay dividends using old profits, and a stark example is HTC. They paid a dividend of 40 NT dollars, but the stock collapsed the following year.

As for making money from price differences, this requires market intuition. Stock prices are influenced by company operations, market sentiment, industry trends, and more, making accurate predictions very difficult. I’ve seen data showing that over 80% of fund managers in the U.S. fail to beat the market over ten years, which illustrates the challenge. So, the key to making money in stocks isn’t about timing precisely, but about choosing the right investment strategy.

If you are a working professional or don’t have time to watch the market, I recommend a buy-and-hold approach—select some companies with good dividend yields or track broad market ETFs, and invest regularly and systematically. The benefit of this is that your purchase price will be averaged out; as long as the market trends upward in the long run, you will profit. According to statistics, investors who have used dollar-cost averaging to buy 0050 ETF for over five years have achieved an 82% profit. In contrast, retail investors who trade frequently have an average loss of 15.7%.

If you have time to monitor the market, you might consider swing trading or day trading, but this requires research into technical analysis and news. Swing trading involves capturing upward cycles of certain thematic stocks, like travel-related stocks or online shopping stocks, which tend to have seasonal patterns. Day trading involves entering and exiting on the same day, testing your understanding of support and resistance levels and your quick reaction skills.

Honestly, the answer to how to make money in stocks varies from person to person. The most important thing is to first understand yourself—know how much time you have, how much risk you can tolerate, and what your goals are—so you can choose the method that suits you best. Long-term investors tend to have more stable returns because they diversify risk and avoid emotional decisions. Short-term traders, while some make big money, are usually top-tier experts who put in considerable effort.

The biggest risk in investing is being carried away by market sentiment—following others’ profits and chasing after gains, or panicking and selling during big drops. Those who can consistently profit in the stock market are investors with clear strategies, strict risk control, and who are not swayed by short-term fluctuations. Instead of chasing overnight riches, it’s better to find your own rhythm and steadily accumulate wealth.