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How to buy stocks without a broker?

Managing your own brokerage account, thereby bypassing the need for a stock broker, has become an increasingly popular option for many traders around the world.

Dealing with stocks these days doesn’t require you to have your own broker since you trade on your own with the help of the Internet. All that you need to do is to set up your own account online and get to start trading soon. This is the answer that investment firms gave their customers who wish to either sell or buy stocks on their own. So what are the steps needed to buy stocks without a broker? Listed below are the basic steps that you can follow to be able to deal with trading stocks online.

First, you can invest in the company through its direct stock purchase plan. Many popular companies like Walt Disney offer such a plan to interested individuals who want a share of the magic without spiraling into bankruptcy. You will find that investments in direct stock purchase plans can make thousands of profits on just a few hundred of dollars in capital investment, if and when you know how to choose good stock picks.

The terms and conditions of the plan will vary but most are affordable. For example, the company will require a certain amount of deposit for one share. Your subsequent acquisition of other shares will be through automatic debiting of your account on a monthly basis. You are basically saving money albeit in the form of stocks in a profitable company, not currency in the bank.

Online Trading Companies

Using an online brokerage firm may, technically speaking, still count as a “broker”, but only because unless you buy shares directly from the corporation itself, you simply cannot buy them independently. Online firms such as these provide a buying and selling platform that is non-invasive and usually offer a flat commission per trade.

Research the stocks you want to invest in. Most of these online trading sites also provide research material so you can educate yourself on the stocks and bonds you may be interested in buying. You should do a lot of research on any stock before you decide to invest your money in the stock. These sites also help you to understand finance and trading terminology that you may be familiar with. It is important that you make informed and educated decisions to help reduce the risk of loss of your money.

Invest through the company’s direct stock purchase plan

A number of companies, offer direct stock purchase plans. These plans allow investors to buy shares of stock directly from the company. Most have a minimum initial deposit but are happy to waive it if you agree to automatic monthly withdrawals from your checking or savings account. This way, the company automatically purchases stock for you by debiting your bank account every month. This can be an easy and relatively painless way to save.

Take advantage of the DRIP program’s cash investment option

Many companies also offer something called Dividend Reinvestment Plan or DRIP, in which all dividends are reinvested in additional shares rather than being deposited into your bank account. If you want to buy stocks without a stock broker, enrolling on a DRIP program may be the easiest and quickest, as it can often be done online in a couple of minutes, even by inexperienced investors. Some companies require you to own a share in the company before you can enroll in their DRIP plan. This can be done easily if the company you are interested in is a big one, as most corporations have shares available for sale to the public.

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30. Jan, 2012

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