How to invest in stocks using a Direct Purchase Plan

Direct Purchase Plans are great for beginners

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By 02SmithA
eHow Community Member

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Direct Purchase Plans are great for those with small amounts of money or those getting a feel for the stock market. Here is a look at how to get started investing using these plans.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

Money
Account with an individual company

Step 1

A Direct Purchase Plan, or a DPP offer investors starting out or those with small amounts of money a great way to start investing. This elimates the middleman and helps with cost and tax efficiency.
Step 2

A Direct Purchase Plan is offered by many major companies directly to individuals. Companies such as McDonald's, Nike, and Kellogg offer Direct Purchase Plans with a minimum required investment of as low as $25. For a complete list of companies offering these plans look in the resources below.
Step 3

The SEC prohibits companies from advertising their direct purchase plans, so often an investor will have to contact investor relations if they need specific information regarding how to get started with the DPP.
Step 4

What are the advantages to these plans? They allow an individual to get away from using the expensive middle man and they also allow individuals to buy portions of a share. For example, if Kellogg's stock is at $50 a share and you only have $25, it will by half of one share for you.
Step 5

In addition to your orginal purchase, which is cost efficient, any further purchases you will make are generally very inexpensive and are extremely convenient. The whole process of the Direct Purchase Plan is all about efficiency and convenience!