Buy stocks direct
If you felt burned by the stock market following the financial crash of , you are not alone. The financial crash of left many wary of investing in the stock market and working with stockbrokers. In recent years, however, the investment landscape has undergone a transformation. Between the internet and numerous investment apps, it is possible to purchase stocks directly online without a broker. As a result, you have more flexibility in what you trade, when you trade and how much you pay in fees. Whether you own stock or are looking to buy stock for the first time, it is worth considering whether buying stocks directly is right for you.
How to Buy Stocks
Investing wth DSPPs is a low-cost way to invest directly with a publicly traded company. These plans are generally set up directly with the company or are administered through a third party transfer agent.
Using a direct stock purchase plan has advantages over both traditional and online discount brokers. First, these plans avoid sometimes costly commissions and fees charged by brokerage firms.
Another important benefit of using a DSPP is the passive investing opportunities that come with them. Investors can usually set up an automatic investment which transfers money from a bank account and purchases shares with the money. For as many reasons as there are to like direct stock purchase plans, there are some disadvantages investors should be aware of.
T here are a number of different ways to invest in the stock market. Online discount brokers tend to be the most popular choice for buying and selling stock based on convenience and relatively low commissions and fees. Then there are traditional brokerage firms that may charge higher fees but offer more stock market advice.
Several well known publicly traded companies i. This is known as a direct stock purchase plan and can be a low cost and efficient way to build a long term portfolio. A direct stock purchase plan DSPP is a service offered by some companies that allows investors the opportunity to purchase stock directly from the company or a third party agent. While not every publicly traded company offers a DSPP, there are plenty of top quality dividend paying stocks that do.
An investor who decides to purchase stock from one of these plans is able to eliminate the need to use a traditional or online broker. Buying and selling stock through an online broker offers a convenient and low-cost way to invest. While there are plenty of advantages to using an online stock broker to buy and sell stock, using direct stock purchase plans should not be entirely ignored. Most direct stock purchase plans allow shareholders the ability to set up a recurring investment every month.
Stocks can automatically be purchased using funds withdrawn from your checking or savings account on a recurring basis. This takes many of the hassles out of purchasing stock for investors looking to simplify their finances. One option offered by most company plans is to sign up for dividend reinvestment. This is similar to setting up a DRiP through an online broker.
By opting to reinvest dividends, an investor can accumulate additional shares with no additional commission or fees. Have you ever purchased a stock at its high and then watched it go down after you bought it? One way to avoid this phenomenon and avoid overpaying for a stock is through dollar cost averaging.
Investors who decide to set up automatic investments from a DSPP are able to dollar cost average into a stock. This is a great way to build your shares in a company by paying a competitive share price over many months. This is a great way to reduce the cost of building a solid portfolio of stocks.
A great thing about a DSPP is that investors can purchase fractional shares of stock. This makes it easier for the beginning investor with little funds to initiate a position in a stock.
The direct purchase plans will let the investor buy fractional shares which makes it easier to start a position. Since investors can purchase fractional shares through a direct stock purchase plan, it lowers the initial investment requirement. While purchasing stock directly from a company or transfer agent has plenty of advantages, there are a few things investors should consider first.
Here are 5 disadvantages for those looking to invest directly with a company instead of a broker. Several companies charge an initial setup fee when an investor opens a purchase plan account. These costs cover administrative expenses and must be paid before any stock is purchased. If the investor plans to own shares in the stock long term, then this expense is minimal compared to brokerage fees and commissions. One of the biggest downsides of purchasing stock from a DSPP are the automatic investment fees charged by some of the companies.
It is important to note that not all companies charge the same fees, but this is something to watch out for when you go to buy stock. If you are a short term trader, then stick with your low-cost discount broker.
Direct stock purchase plans are tailored to the long term investor, not a day trader. While a DSPP may be great for a long term dividend investor , they are not as convenient to those moving in and out of different stocks in a short amount of time.
One of the advantages of buying stock through a DSPP is the low barriers to entry. While most companies offer these low initial investment requirements, some make it more difficult to open an account. This can be a high initial requirement for the average investor looking to build a diversified portfolio.
A large initial investment also defeats the purposes of dollar cost averaging into a stock which is an advantage of a DSPP. By purchasing stock directly from a company or third party transfer agent, investors lose the ability to consolidate their holdings. Investors who prefer to keep their stock positions in the same account may want to stick with using an online broker. Since direct stock purchase plans are opened outside of any stockbroker, the investor loses the ability to keep their assets in a single account which can make it more difficult to track and manage investments.
Direct stock purchase plans offer another alternative to buying and selling stocks other than traditional and online brokers. These plans offer several advantages over the other methods of allocating stock, including lower fees and commissions. A DSPP also gives the investor the tools to set up automatic investing each month as well as DRIP dividend reinvestment , which can be huge time and money savers.
While an investor may avoid certain broker fees, some companies charge administration and automatic investment fees for investors buying stock directly from them. Therefore, these plans are not tailored to the short term trader and favor the buy and hold investor over time.
Overall, direct stock purchase plans have plenty of advantages compared to brokers, making them a viable investment tool.
Have you invested through a direct stock purchase plan? What disadvantages can you add for interested investors? John Schroeder writes about investing and other topics at The Money Sprout where he shares his goals on how to create passive streams of income so he can spend more time doing the things he enjoys, and less time working.
I can see where it would be difficult to diversify with multiple accounts at different companies along with the added hassle of trying to sell stock holdings.
What is the fastest way and DIY method to do it tomorrow? Minimalist, you would need to open a brokerage account, or buy directly from the company. You will need to fund your account if you use a brokerage account, which can take several days, depending on your brokerage firm and your bank.
Funding may be different if you buy directly from the company. Your email address will not be published. Disclaimer: The content on this site is for informational and entertainment purposes only and is not professional financial advice.
References to third party products, rates, and offers may change without notice. Please visit the referenced site for current information. We may receive compensation through affiliate or advertising relationships from products mentioned on this site. However, we do not accept compensation for positive reviews; all reviews on this site represent the opinions of the author.
Privacy Policy. Editorial Disclosure: This content is not provided or commissioned by the bank advertiser. This site may be compensated through the bank advertiser Affiliate Program.
Skip to main content Skip to primary sidebar Skip to footer. Search This Site. Table of Contents. Strategies to Pay for College. Enter you name and email address to join our mailing list. Note About Comments on this Site: These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser.
Leave a Reply Cancel reply Your email address will not be published. Recent Posts. Privacy Policy Editorial Disclosure: This content is not provided or commissioned by the bank advertiser.
Applies to Certain Products and Volumes. Stock Trading Carries Risk. Online Stock Trading and Investment Platform. 10$ Minimum Deposit. 1$ Minimum Investment.
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.
Lowe's Companies, Inc.
While many investors choose to buy and sell investments through a brokerage account , some investors may wonder how they can buy stocks without a broker. 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 directly as possible, one of these plans can help you achieve that goal, but be aware of the drawbacks that come with avoiding brokerage services before you abandon them completely.
How to Buy Stocks Online Without a Broker – Direct Stock Purchase Plans
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. Determine your investment goals and temperament.
How do I Buy Stocks Direct?
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.
We use cookies to allow us and selected partners to improve your experience and our advertising.
Company Filings More Search Options. Many companies allow you to buy or sell shares directly through a direct stock plan DSP. You can also have the cash dividends you receive from the company automatically reinvested into more shares through a dividend reinvestment plan DRIP.
Advantages & Disadvantages of Stocks Directly From the Company vs. a Broker
It's designed for individual investors who might otherwise avoid making small, long-term stock purchases because of large minimum brokerage fees. You always have control of your shares. You may withdraw your DSPP holdings of Home Depot stock at any time, or may ask the program administrator to sell your shares. Purchasing Stock If you do not already own Home Depot stock, or if your stock is held through a brokerage account, you may use the plan to buy your first shares directly from the Company. If you already own Home Depot stock, you may invest cash dividends and optional cash purchases in additional shares of Company stock. Transaction Fees For each transaction, a small service charge is deducted from your investment plus the pro rata amount of brokerage commissions generally 5 cents per share for purchases and 15 cents per share for sales. Service charges are:. Features at No Charge Through DSPP, you receive a stock safekeeping service and the ability to make transfers or gifts of Company stock - all at no charge. The recipient of the transfer or gift will have an account opened in their name and will enjoy full program benefits. You may automatically receive The Home Depot, Inc.
Direct Investment Plans: Buying Stock Directly from the Company
Investing wth DSPPs is a low-cost way to invest directly with a publicly traded company. These plans are generally set up directly with the company or are administered through a third party transfer agent. Using a direct stock purchase plan has advantages over both traditional and online discount brokers. First, these plans avoid sometimes costly commissions and fees charged by brokerage firms. Another important benefit of using a DSPP is the passive investing opportunities that come with them. Investors can usually set up an automatic investment which transfers money from a bank account and purchases shares with the money. For as many reasons as there are to like direct stock purchase plans, there are some disadvantages investors should be aware of. T here are a number of different ways to invest in the stock market. Online discount brokers tend to be the most popular choice for buying and selling stock based on convenience and relatively low commissions and fees. Then there are traditional brokerage firms that may charge higher fees but offer more stock market advice.
