Save Yourself On Broker Fees By Investing In A Direct Purchase
Some of the most well-known and most profitable companies in America will sell shares of their stock to you directly. This type of investment is called a Direct Stock Purchase Plan (DSPP). A DSPP can be an attractive alternative to other methods of investing. A DSPP is a set amount of money invested in a company each month. Fluctuating stock prices will have an effect on how many shares you can buy each month with the set amount of money. Some disadvantages to a DSPP is that you are your own bookkeeper with the stocks purchased. Another disadvantage is that your portfolio is not diverse, only investing in one kind of market.
See If Your Favorite Companies Offer A Direct Purchase Plan
Before you get too excited and start to think that you can directly purchase any stock that you want without a broker, realize that this is not necessarily the case. Only some companies offer this feature. However, they tend to be larger companies that offer direct purchases. Businesses such as Walmart and Mcdonalds are two that offer direct purchase plans. You can set up a DSPP with a company through their direct website.
Minimum Required Investments
While you may typically begin an investment account with just about any amount of money, that is not exactly true of direct purchase plans. There is typically a minimum investment amount set for each individual company. However, that amount can be very small. There are even some companies that allow for an individual to invest for as little as $25. The investment fees, however small, can add up over time. Be sure to understand what the fees are prior to setting up a DSPP.
Another way to invest in a company without a broker is through a Dividend Reinvestment Program or DRIP. Many companies who offer a DSPP also offer a DRIP. A DRIP will allow you to reinvest the dividend you make from the stock you have in their company. You do not need to have a DSPP to obtain a DRIP. Some DRIP’s involve little to no fees and can be set up as entirely automated.