How to Buy Stocks Direct

For any person that invests in the stock market every single dollar spent can affect profit margins. An excellent way to save the cost of brokerage fees is to buy stocks direct from the underlying company offering the stock. There are drawbacks to buying stock direct but there are plenty of positives as well it just depends on a person's investment goals.

Difficulty: Moderate

Instructions

1. Determine which companies offer a direct purchase plan for their stock. Currently about 1500 companies offer direct purchase plans, so you are somewhat limited in the stock you can choose when buying direct. See the resources section for more information.

2. Research each stock on the list to determine which stock best fits your investment goals. Risk aversion, diversification, time horizon, and overall investment goals shape and determine which stocks best meet your investment needs.

3. Identify how each company operates the direct purchase plan. A majority of companies outsource the direct purchase plan to American Stock Transfer and Trust Company, which handles the transaction. How each company operates their plan may take some research because there are regulations against advertising these plans. In addition, each company may different minimum investment policies. See the resource section for more information.

4. Contact the company's direct purchase plan service department for all of the necessary enrollment procedures to enact the direct purchase plan.

5. Submit all the necessary paperwork for approval to buy stock directly. Each company has an application to fill out and return.

6. Buy the stock directly from the company once the application process is complete. Most companies offer the ability to transfer your funds electronically to buy the stocks direct. Most also allow you to send them a check if you can't transfer the funds electronically.

Resources

• List of Companies that Offer Direct Purchase Plans
• American Stock Transfer and Trust Company