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Buying Stock without a Broker

Three Ways You Can Invest On Your Own


Man with Money Bag

There is no question that most popular way to buy and sell investments is by opening a brokerage account, though it is not necessary if you want to begin investing.  In fact, many new investors aren't aware of the alternative ways to invest in stocks or mutual funds. Although working with a qualified broker definitely has advantages, it may be better, in some cases, to purchase your holdings directly.

1. Invest Through the Company's Direct Stock Purchase Plan 

A number of companies, such as Walt Disney, offer direct stock purchase plans. These plans allow investors to buy shares of stock directly from the corporation. 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 on a predetermined schedule. This can be an easy and relatively painless way to save.

2. Take Advantage of the DRIP Program's Cash Investment Option

If the company doesn't offer a direct stock purchase plan, find out if it has a dividend reinvestment plan (DRIP). DRIPs are a great tool for growing your portfolio but they also have a hidden feature that most people don't know about; the cash investments option. Most plans allow you to send a check in any amount over $10 or $25 to the program administrator and they will purchase additional shares for you. The big benefit here is the fact that the investor is allowed to purchase fractional shares, allowing all of his or her money to begin building wealth. The catch? You have to own one share of the company before you can enroll. To search for DRIPs, a good resource is the largest provider in the industry, Computershare.  Alternatively, you can search the investor relations website of the business in which you want to buy an ownership stake.

To see how a real-life DRIP works, check out this post I wrote, detailing how my family set one up more than a decade ago to teach my youngest sibling how investing works.

3. Buy a Single Share through a Specialized Service

Companies such as One Share allow you to buy a single, framed share of stock in many leading corporations. While this may seem like a novelty gift, it provides the needed requisite to enroll in a DRIP. Once the share is in your possession, the enrollment paperwork takes only a few minutes. After you're enrolled, you can start building positions in your favorite stocks while avoiding those pesky brokerage commissions.

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