Direct Stock Purchase Plan Companies

Video Transcript

"Hi I'm Roger Groh. We're here today to talk about direct stock purchase plans and why they are of interest. Well if you, I've had a chance over the years to watch many of the masters in the investment business and although their personalities differed tremendously they're individual personalities differed tremendously, what they actually did wasn't that much different. They accumulated very large positions in reliable consistent growth companies and as a result ended up very wealthy over a 20 or 30 year period. A stock purchase plan is a way to do that where you are setting up in your own mind because you are not contractually obligated to do this, a consistent program where you are buying stock directly from a company that you have elected buy for. Now in theory you could also do that through a stock broker whether it is a full service broker or discount broker. You know a full service broker can pay more commission a discount broker you are going to pay less. If you buy direct from a company your commissions are probably closer, the effective fees, they don't call them commissions but the fees are probably about equal to that of a discount broker but you get the advantage of setting up a program where you do something continually, and it is a terrific way to build large positions. There is one big advantage in going that route where in most corporate direct stock purchase plans you can actually then gift that stock for free to whomever you want. Now there might be tax implications for that, there probably are but to be able to do that without commission for a large number of shares could make a substantial difference down the road. So I'm Roger Groh and that is why you would invest in direct stock purchase companies."