Investing For Beginners

Investing For Beginners is a series of articles, resources, and other information about basic investments, value investing, quantitative research and other ideas.

How To Buy Stocks Without a Broker

Investors typically buy and sell stocks using a brokerage firm such as TD Ameritrade or Charles Schwab.  But what if you don't want to open a brokerage account?  There are still ways you can invest in stocks.

Many companies, especially large blue chip shares, sponsor programs that allow you to buy stock directly from the firm's transfer agent for free, or at a heavily subsidized price.

Buy Stocks Through a Direct Stock Purchase Plan

It's as easy as going to and opening an account.  When you apply online, you can tell the transfer agent whether you want your dividends direct deposited into your checking or savings account or reinvested in additional shares of stock. 

The plan allows fractional stock purchases so every dollar gets put to work, even if you don't have the right amount to acquire a full share at any given time.

Buy Stocks Through a Dividend Reinvestment Plan

Even if the company you want to invest in doesn't offer a direct stock purchase plan, they may have a dividend reinvestment plan (DRIP). To search for DRIPs, a good resource is Computershare.  Alternatively, you can search the investor relations website of the business in which you want to invest in.

DRIPs are a great tool for growing your portfolio but they also have a hidden feature that most people don't know about; the cash investments option. Most plans allow you to send a check in any amount over a minimum (nominal) amount for purchase of additional shares.

There is one catch.  You have to own one share of the company before you can enroll.  To get around this, you can buy a single share of stock through a specialized service. Companies such as One Share allow you to buy a single, framed share of stock in many leading corporations, providing the needed requisite to enroll in a DRIP. After you are enrolled, you can build stock positions while avoiding brokerage commissions.

Buy Stocks Through an Employee Stock Purchase Plan

Many large companies allow employees to become an owner of the firm at attractive discounts through programs known as Employee Stock Purchase Plans. 

This option is normally arranged through the Human Resources department.  You tell the company how much of your paycheck you want withheld to buy shares.  Then each pay period, part of the money you would have earned is used to buy stock at a cheaper price than you could have paid through a brokerage firm. 

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