Can I trade stock without a broker?

While many investors decide to buy and sell investments through a brokerage account, some investors may wonder how they can buy shares without an intermediary. Direct investment plans offer the alternative to intermediaries that these investors are looking for. Can I trade stock without a broker?

6 ways to buy shares online without a broker 

1. Use a transfer agent such as Computershare – high commissions
2. Use the direct purchase plan through your employer – you must be employed by the company
3. Take advantage of the dividend reinvestment plan – good for investors on account of dividends
4. Use the company share purchase plan (SPP) – for employees only
5. Use the company’s share option purchase plan (SOPP) – for employees only
6. Use a commission broker for 0 USD – the best option

Benefits and disadvantages of direct plans

The basic advantage of avoiding intermediaries and buying directly from the company is simplicity. Applications and websites have significantly improved the broker’s performance, but the investor still needs to choose between securities and make decisions regarding the type of order for these investments. Direct stock purchases and dividend reinvestment plans can be even simpler – just send money to the right place and you’ll receive a plan.

Direct action plans also allow for better communication between the company and its investors. When you invest through a brokerage office, all notices from the company will be made through a brokerage office. For investors with different investments, company notifications merge with each other because they all appear in the inbox as a message from your brokerage office, not from the company. This can lead to some investors completely skipping news, potentially losing useful information. Thanks to direct communication, the company and its investors remain in better contact. 

Institutional investors may have access to additional benefits through direct purchase plans, depending on the company issuing the shares. Special “exemption rebates” allow institutional investors to buy shares at a discount that is not widely advertised. 

The simplicity that direct investors enjoy is also a major disadvantage of alternative solutions. For example, if you sign up for a Home Depot direct purchase plan, you will only have the option to buy Home Depot shares. An investor with a brokerage account and an investor with a direct share plan may purchase the same Home Depot shares for the same price, but an investor with a brokerage account may also purchase any other collateral for brokerage services.

Companies with direct plans to buy shares

The following are the five known companies that have the most active plans to buy shares directly:

1. The Coca-Cola Company. If you’re a new investor, you can invest a one-time USD 500 or 10 separate automated purchases worth USD 50.
2. Exxon Mobil. New accounts require a minimum one-time investment of $ 250. 
3. Johnson & Johnson. This plan is quite popular for many reasons. For just $ 25, you can start with the lowest plan I’ve found.
4. Walmart. At least USD 250 or 10 ongoing automatic payments of USD 25 are required.
5. Altria Group. A one-time investment of USD 500 is required.

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