How to Buy No-Load Stocks Without a Broker

Investing without commissions saves money.

In the old days, a stockbroker was frequently referred to as a "customer's man." This person, who may be a woman, acted as a go-between to facilitate the sale and purchase of stock in a particular company and served the best interests of the customer. For his expertise, he was paid a commission. Today, sophisticated investment tools allow even investment novices to trade in the stock market, and it is not always required to pay a commission.

Things You'll Need

• Access to financial research information
• Money to invest

Instructions

1. Determine your investment objectives. Consider such factors as your age, time to retirement, aversion to risk, money available for investment, savings and other investments. Research the performance of companies you wish to invest in to ensure their results match your objectives.

2. Contact the investor relations department of the company you are interested in investing in. Many companies, both those privately held and those whose shares trade on listed stock exchanges, offer direct stock purchase plans. These direct purchase plans allow individual investors to purchase stock directly from the company without the use of an intermediary and without a sales commission, or load. Each company has its own set of rules and regulations regarding direct stock purchases, including minimum investment amounts or recurring purchase requirements. Be sure you understand all requirements prior to investing.

3. Sign up for the Dividend Reinvestment Program, or DRIP, of companies whose stock you already own. DRIP programs allow current shareholders to have all or a portion of their dividends reinvested in additional shares of the company's stock without paying a sales charge. Advantages of DRIP programs is that there is no minimum investment required and whatever amount is used can purchase fractional shares. Not all companies offer DRIP. Check with the investor relations department of the company involved to find out if it offers such a service.

4. Some companies that offer a DRIP program do not offer a direct purchase program to non-shareholders. If you determine that you would like to build a portfolio with a particular company that falls into this category, you can purchase a single share of that company's stock through a brokerage house, such as One Share, that specializes in selling single shares. You will pay a commission for this share, but once you own stock in the company you are now eligible to participate in its non-commission direct purchase and DRIP programs.

5. Obtain diversification by investing in no-load stock mutual funds. These are funds that are sold at their net asset value without a sales charge at the beginning or back end, so all of your money goes to purchase shares of the mutual fund. These funds can be purchased directly from the mutual fund company or through an investment firm. Even though there is no load or sales charge, a percentage of the funds assets are dedicated to management fees. Make sure your are comfortable with how the fund is managed prior to investing.

Tips & Warnings

• Past performance of any investment is not a guarantee of future results. Investing in stock involves inherent risks. You may lose some or all of your investment.

Resources

• Business Week Mutual Fund Scoreboard
• First Share
• One Share