How to Buy Stocks Online Without a Broker
Many companies will sell their stock directly to individuals without using a broker. There is usually a minimum purchase requirement; some are even as low as $25 per transaction (as of 2009). Direct purchase options can save investors hundreds of dollars in broker commission fees, transaction fees and annual account maintenance fees. If you know exactly which stocks you want to purchase, and you do not require the advice of a broker, then buying stocks online directly from a company without a broker may be right for you.
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Things You'll Need
- Account with direct purchase option online
- Paypal, major credit card or checking account
Instructions
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Look through a list of companies that offer direct stock purchase plans to find the ones that interest you. Take into consideration the initial investment required, which varies by company, as well as additional purchase limitations. Some companies with direct purchase options charge minimal fees for purchasing or selling their stock directly. Links are provided in the Resource section of this article to lists of companies that offer direct investment opportunities for you to consider.
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Choose one or several companies that meet your criteria for share price, initial investment required and risks of investment. Also, consider how long the company has been in business and the growth pattern of the stock over the past 5 years. Additionally, consider whether the company pays dividends to shareholders and if you can reinvest your earned dividends to purchase more stock without paying fees.
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Go directly to the company website and request initial stock investment information. Most companies will require paperwork to be completed and returned with signatures as well as a check for the initial investment to set up an account. Be sure to read the investment information thoroughly and ask questions about anything you do not understand before investing. If you are able to set up your account directly on the Internet and make your payment via electronic check, paypa or credit card, then proceed if you are comfortable with the investment and understand the program completely.
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Track your investment on the Internet by going to the company site periodically. Many companies will allow you to set up monthly automatic investments or allow periodic investments. Be sure to keep an eye on your stock value. You may want to keep a dollar value in mind, and if your stock value drops to that level, you will sell or buy additional shares.
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Check your dividends earned for the year after December 31st each year for income tax purposes. You should be able to print a report from the company website that indicates shares purchased, the purchase price, current value and dividends earned whenever you want. Keep records of actual purchase dates and costs to calculate your gain or loss when you decide to sell your stocks. Dividends earned on stock are taxable income even if you reinvest them to buy more stock.
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Tips & Warnings
Diversify; invest your money in several different companies to help protect your investment.
Never invest more than you can afford to lose, as no stock is infallible.
Resources
- Photo Credit Julia Fuller
