Many beginner stock investors prefer to buy stocks without consulting brokers to avoid the fee of using one. Of course, there are no rules that you must work with a broker to buy a stock. But know such direct investments have its merit and demerit. So weigh both options before transacting.
Ways Beginners can buy stocks without a broker
Here are some of the ways to purchase stocks without going through a broker.
Buy through the Direct Stock Purchase Plan (DSPP) of the company
Just as the name implies, you are buying stocks directly from the company. DSPP have been in existence for long, but only a handful of investors know about it. Companies use it as a means to open doors for small investors to become shareholders.
Companies put in machinery in place for investors to deal directly with them. They hire transfer agents to take care of the paperwork and everything relating to the transaction. Most of them ask for payment, while some don’t because the arrangement they have with the company.
List of transfer agents
- Citi Fund Services.
- ACS Securities Services, Inc.
- Capital Transfer Agency Inc.
- Corporate Stock Transfer, Inc.
- Boston Financial Data Services, Inc.
- Administrative Data Management Corp.
Companies that offer DSPP (Direct Stock Purchase Plan)
- NOKIA Corporations
- Johnson & Johnson
- Coca cola-company
- Exxon Mobil Corporation
- American State Water Company
- American Express Company
Buy through Dividend Reinvestment Program (DRIP)
If you own shares in a company, you can register for DRIP and reinvest the dividend you receive from them as a shareholder. Depending on the individual plan you are into, you may have to pay a fee or nothing.
Wrapping it up
One of the disadvantages of buying stock without a broker is that you will miss out on the advice you are supposed to receive from them. So you have to do your homework thoroughly before you choose any stock, especially now that you have become your financial investor.