How to Invest Without a Broker
Although there is no law that requires a broker to facilitate the purchase or sale of stock, certain special circumstances do [e.g. if the stock is restricted or unregistered with the Securities and Exchange Commission (SEC)]. The reality is that so long as stock has been registered with the SEC, and all stocks traded through the exchanges must be, then the purchase and sale of stock is open freely to the public. As a result the utilization of brokers, though very advisable, is merely a recommendation. If brokering your investments is not for you, then these steps will guide you on how to invest without the aid of a broker.
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Instructions
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Invest in stocks directly from an acquaintance, friend, or relative. Negotiate the terms of the sale, and then consult the company on the sale of those shares. Speak with their investor relations (or similar) department and request the Transfer Agent. Allow the Agent to guide your direct stock purchase with another party. Complete the sale and confirm the transfer by virtue of a new stock certificate in your name, to be issued by the Transfer Agent whenever ownership stock in the company is transferred.
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Invest in stocks directly from the company itself. Contact the company’s investor relations (or similar) department and inquire about direct stock purchase plans. Question whether a minimal initial deposit will be required and, if so, whether a waiver is available. Request the conditions of such waivers, such as automatic monthly debits from a bank account. Proceed with the direct stock purchase at the direction of the company’s Transfer Agent.
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Invest in a dividend reinvestment plan (DRIP), specifically designed for the smaller investor and available through most publicly-traded companies. Enroll in the plan with purchases of whole shares or even fractions of shares. Expect the company to continually reinvest your stock earnings with automatic purchases of more stock whenever a dividend is issued, or if you invest more money yourself.
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Tips & Warnings
Utilize a corporation’s transfer agent(s) to every extent possible when investing on your own. These agents are advisers specifically hired to account for the company’s stock owners. As part of this duty they sell stock to those who open accounts in DRIPs or direct stock-purchase plan, and can guide and advise you in that regard.
DRIPs have an advantageous feature: a cash investment option. This means that instead of purchasing stock by the share, you can contribute money (usually in amounts greater than $10 or $25) to your plan and the program’s administration will purchase additional shares, if even in fractional increments, on your behalf.
Look for the name of a company’s transfer agent to be printed on the back of a stock certificate.
You cannot open a DRIP account without owning at least one single share in the company already. This is a typical requirement to DRIP investing, and can be a seemingly big hurdle. Find and utilize brokerage companies that specialize in single-share stock purchases to facilitate the DRIP requirement.
