How to buy stocks direct from a company
We use cookies to allow us and selected partners to improve your experience and our advertising. By continuing to browse you consent to our use of cookies. You can understand more and change your cookies preferences here. One of the most traditional ways to invest your money is to buy shares in individual companies.
Direct Investment Plans: Buying Stock Directly from the Company
You may be the sort of person who likes to cut out the middleman in any transaction and so you're asking if you can get stock in a company without going through a broker. Many publicly traded companies offer direct stock purchase plans.
A DSPP is an investment account you use to buy stock directly from the company. DSPPs have some real advantages for small investors. They have some disadvantages as well, so you need to think things through before jumping into this form of investing. Basically, a DSPP is an investment account dedicated to the stock of a single corporation. When you buy stock from a broker, shares are typically registered to the brokerage firm and credited to your account. According to Bankrate. When you consider opening a DSPP with a company, read the plan brochure or prospectus carefully.
There is sometimes a one-time set-up fee and the charges for selling shares are usually higher. If this describes you, DSPPs just might be your cup of tea. This not only makes investing with a DSPP affordable, it is a great way to save money on a regular basis. The downside of direct stock purchase plans boils down to lack of flexibility. If you want to use DSPPs to buy shares in more than one company, you have to open a separate account for each one.
Another problem is that all of your investment eggs are in one basket if you have just the one DSPP because there is no way to diversify your investments. To get the risk-reducing benefits of a diversified investment portfolio, you need a brokerage account that allows you to invest in a variety of securities if you want to avoid opening up a baker's dozen or more DSPP accounts.
He writes about business, personal finance and careers. Adkins holds master's degrees in history and sociology from Georgia State University. He became a member of the Society of Professional Journalists in Lack of Flexibility The downside of direct stock purchase plans boils down to lack of flexibility.
Video of the Day. Brought to you by Sapling. References Bankrate. How to Buy Individual Stocks. Good Ways to Invest Your Money.
Drip Stock Investment Programs. More Articles You'll Love. How do I Buy Stocks Direct?
Direct investment plans offer the brokerage alternative that those investors are seeking. If your primary investing goal is to acquire a single company's stock as. A direct stock purchase plan (DSPP) enables individual investors to purchase stock directly from the issuing company without a broker as.
When you buy stock, you are actually purchasing a tiny piece of the company. If there are only shares issued and you own one share, you own 1 percent of the company. If, on the other hand, there are 10 million shares issued and you own one share, your percentage of ownership in the company drops dramatically. There are several ways to buy company stock. You can go through a broker, purchase shares of a stock mutual fund, or in some cases, you can buy stock directly from the company.
You may be the sort of person who likes to cut out the middleman in any transaction and so you're asking if you can get stock in a company without going through a broker.
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Advantages & Disadvantages of Stocks Directly From the Company vs. a Broker
There are a few circumstances in which a person can buy stock directly from a company. The following is meant to cover some of these instances, which include direct stock purchase plans , dividend reinvestment plans DRIPs , and employee stock purchase plans ESPPs. This is when a person buys stock directly from the issuing company. Several well-known companies will sell stock directly to individual investors. Most companies that offer this kind of purchase option don't charge investors a commission , and if they do, the commission or service charges is very low compared to buying stocks through a broker. If you're buying a very small number of shares and want to minimize your costs, a direct stock purchase is a great way to go.
How do I Buy Stocks Direct?
Federal government websites often end in. The site is secure. Stocks are a type of security that gives stockholders a share of ownership in a company. Why do people buy stocks? Why do companies issue stock? What kinds of stock are there? What are the benefits and risks of stocks? How to buy and sell stocks Understanding fees Avoiding fraud Additional information. Common stock entitles owners to vote at shareholder meetings and receive dividends. Common and preferred stocks may fall into one or more of the following categories:.
If you felt burned by the stock market following the financial crash of , you are not alone.
Company Filings More Search Options. Many companies allow you to buy or sell shares directly through a direct stock plan DSP.
How to Buy Stocks Online Without a Broker – Direct Stock Purchase Plans
Advertiser Disclosure: The credit card and banking offers that appear on this site are from credit card companies and banks from which MoneyCrashers. This compensation may impact how and where products appear on this site, including, for example, the order in which they appear on category pages. Advertiser partners include American Express, Chase, U. Bank, and Barclaycard, among others. Do high brokerage costs deter you from investing in stocks of financially stable, profitable companies? Once companies list on a stock exchange, they employ the services of a transfer agent, who handles all administration related to share transactions — most listed companies use Computershare to provide these services. And one of the many services Computershare provides is the administrating of direct stock purchase plans for companies who want to sell their shares to the public without engaging a stockbroker. A direct stock purchase plan allows you to buy shares of a company through its transfer agent instead of through a broker. In essence, you cut out the middleman and save yourself a pretty penny in the process. Listed below are five well-known companies that have the most active direct stock purchase plans:. Whenever you choose any investment, analyze the company and the industry carefully in terms of profitability, future outlook, and whether the investment is in line with your goals and risk tolerance. If you choose to invest in individual companies, be sure to invest across a range of industries for a diversified portfolio. All Rights Reserved.
Investing directly in shares
You can set up an account by depositing cash or stocks in a brokerage account. If you prefer buying and selling stocks online, you can use sites like E-Trade or Ameritrade. Those are just two of the most well-known electronic brokerages, but many large firms have online options as well. The broker executes the trade on the your behalf. In turn, he or she earns a commission, normally several cents per share.
