Comparing Direct Purchase Stock Plans

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A direct stock purchase plan is one in which a person can go to a company and buy common stock directly from the company. Find out if a local stockbroker could help the acquisition of a direct purchase stock plan with help from a personal asset manager in this free video on investing in the stock market and money management.

Part of the Video Series: Stock Market
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Video Transcript

Hello, I'm Roger Groh with Groh Asset Management. Today we're here to compare direct stock purchase plans.Well step back a little bit and let's talk about what they are. A direct stock purchase plan is where you can go to a company and buy common stock directly from them. Traditionally that applied to dividend reinvestment and then gradually evolved into outside share holders actually buying shares directly. Now is there an advantage to that to you? Well I would caution first and foremost to be sure that you're buying stock in the best company that you can find, that is the foremost thing. Second, after you've made the decision that you want to own part of this business, then the question is, what's the cheapest way to do it, and are you better off paying the fees, and there are fees in a transaction if you go directly to the company, or are you better off going to your local stockbroker or discount broker and doing the transaction through them. My thinking is that it would take a- it would be on a company by company basis that you would have to add up those numbers and determine which way is best for you. The advantage in going through a company and using the direct stock purchase plan would be that you, if you, up the road desire to gift some of those shares to another person or another entity, it's easy to do, and it may be cheaper on the sell side in order to get out. So when you compare, you have to call the company, you have to check them out, every company is different. Also you can go to their websites frequently on the homepage, if you type in direct stock purchase plans the details will come up on the cost of the transactions, buying and selling, then you have to compare it. I'm Roger Groh.


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