How To Buy Stocks Online Without A Broker

Do you want to buy stocks in America’s most lucrative companies without a broker? Here is the good news! Buying stocks isn’t as complicated as you think, if you are willing to put a little leg work.  

Young investors are unquestionably cautious about playing in the stock market. Due to a lack of confidence in brokers and minimal cash to fund a brokerage account, their entry in the stock market seems difficult.

Direct Stock Purchase Plans and Dividend Reinvestment Plans are a brilliant way to experiment with the stock market without paying a penny to a broker. But it requires a bit of research – learn the lingo, the process, and the pros & cons to confidently buy stocks.

Here are the proven methods that can get the control in your hands and help you save money on commissions. There are above 6000 stocks currently available to buy on the leading U.S. indexes.

Follow this guide and invest in stocks for a financially strong retirement.

Do You Need a Broker to Buy Stocks?

Not at all. If you are dead set on surpassing the broker’s brokerage, you can still erect an investment portfolio without relying on the services or paying broker’s fees. Though options are limited but they do exist. You can buy stocks directly through the company, as companies sponsor special types of programs like direct stock purchase plan and dividend reinvestment plan. Such plans allow the investors to buy shares of the company through transfer agent instead of through a broker.

 Different Ways to Invest in Stocks Without a broker

1. Direct Stock Purchase Plans


A direct purchase plan allows an investor to directly invest in a company that’s publicly traded without paying a fee. There wouldn’t be any middleman at all in the transaction.

Not all companies sell stocks for cash directly to public members. There are some publicly-traded companies that have an available direct purchase plan. While there are some companies that allow their employees to invest in stock through a portion of their salary. The direct purchase plan will then limit your take-home pay as you have to deduct the stock purchases from your monthly pay.

Just the Nuggets

·         Direct investment plans have a variable minimum investment amount typically range between $25 and $2,500.

·         You can schedule your purchases as weekly or monthly.

·         You can invest in small chunks if your purchase value doesn’t allow you to buy a full share. It will still earn you dividends.

·         Fees are charged for account signup, buying shares, reinvesting the dividends, and selling shares.

The Advantages

·         DSPP comes with passive investing like it allows an investor to invest a set value as little as $10 on a recurring basis.

·         You might get a discount between 1% and 10% depending on the company you directly invest in.

·         A full-service broker charges $150 per transaction, whereas DSPP has a very low fee.

The Rip-offs

·         Higher upfront costs associated with starting the account.

·         You can’t consolidate your holdings into a single account as the DSPP is held with individual corporations. 

 2. Dividend Reinvestment Plans


A dividend reinvestment plan is an approach to trade stock directly without a broker. It allows an investor to reinvest dividends back into the stock rather than taking as income.

If you participate in this plan, a specific stock value will go back to the company’s account on the payment date. You have to seek out the registered companies that have a DRIP.

Just the Nuggets

·         The minimum reinvestment requirement is just $10.

·         Dividends are taxable in DRIPs. You will be taxed on the gains even after the cash is automatically reinvested.

·         Dividend reinvestment plans are not always accessible with Direct Stock purchase Plans as some companies don’t outlay dividends regularly.

The benefits

·         You will regularly get a discount on the current price per share without paying fees on the purchase.

·         DRIPs offer automated, compound interest on reinvesting dividends. Investors can frequently reinvest and grow without the need to increase funds.

·         Dividend investments can be fee-free and allow the investor to buy fractions of a share.

The Rip-offs

Limited companies offer Dividend reinvestment plans.

3. Use Robo-Advisors for A laid-back Investing


Robo advisors are the online financial advisors that offer investment help at zero cost with little to no account minimums. These are automated investing services that use computer algorithms to create and manage your investment portfolio. You can buy a stock online with the help of a Robo advisor. It will assess your investment needs, do automatic rebalancing, tax optimization, and risk tolerance with little to no human interaction.

Just the Nuggets

·         Robo-advisors such as Charles Schwab, Personal Capital, and Betterment are some good names that automatically rebalance your portfolio.

·         You have to complete a brief questionnaire to evaluate your investment needs and risk tolerance—anything from stock investment to buying a new car.

·         Robo advisors require cash you want to invest in automating your portfolio.

·         You need to frequently update the Robo-advisor with your changing investment information and risk tolerance.

The benefits

·         Low cost investing with professional consultation from experts.

·         You can open sub-accounts to reach multiple goals apart from buying a stock.

·         No commission fees for self-directed trading. You don’t have to pay on U.S. listed stocks.

The Cons

·         These automated investing platforms may not provide the needed support during extreme market volatility.

List of companies that offer direct stock purchase plan

The companies that offer direct stock purchase plans do not charge a penny for investing or reinvesting dividends to buy shares. However, some may charge for peripheral services like selling shares and auto-invest fee.

Listed below are the five popular companies that have the most direct stock purchase plans:

The Coca Cola Company

At the Coca-cola company, anybody can purchase shares through a direct stock purchase plan and dividend reinvestment plan.

 If you invest through DSP, you can either invest a one-time lumpsum amount or separate automatic purchases in the form of small divisions. A once-off-set-up is worth $10, which is deducted from the initial investment, in addition to a $0.03 processing fee per share.

The settlement of further purchases takes place by a minimum of $50. And the maximum limit of total assets is $250,000 per year. In comparison, the dividend reinvestment plan incurs a charge of 5% investment up to a limit of $2.

Johnson & Johnson

Johnson & Johnson offers an excellent plan for the direct stock purchase and reinvestment dividend. The company pays All-cash purchases and dividend reinvestment charges, and optional cash purchases can be made weekly.  

 Its reinvestment dividend plan is accessible for registered shareholders. And the company offers the reinvestment of dividends into additional shares of common stock without any commission or account set-up fees.

Reinvestment of dividends and the maximum purchase is limited at $50,000 per year. If you want to start with a minimal amount of money, this is the plan you want to get.

Exxon Mobil

Exxon Mobil offers the most reliable investment strategy. Even small investors can follow this strategy through a dividend reinvestment plan. For a start-up, $250 is required. Alternatively, ongoing investments of 5 consecutive payments worth of $50 get you on board.

The most attractive feature of this plan is there are no charges of account set-up and share processing. Plus, there is no fee for the reinvestments of dividends. The maximum limit of purchases is $250,000 per annum. 

Walmart

Walmart offers a dividend reinvestment plan with an optional cash purchase for respective investors. A minimum of $250 or 10 ongoing automatic payments of $25 is required. The company's initial set-up fee is $20 higher than average companies, and $0.05 on optional cash purchases and dividend reinvestments is above average.

The maximum limit of purchases is restricted to $150,000 per year.

Altria Group

Altria has one of the best available dividend stocks for investors. However, the company's charges on cash purchases and dividend reinvestments are higher than average. A minimum one-time investment of $500 is mandatory; alternatively, an ongoing five consecutive investments of $50. 

The initial set up cost of worth $10 is charged, including a share purchasing fee of $0.03 per share. Reinvestment of dividends with the charges of 5% of the total amount invested is restricted to $3. The maximum purchase is recorded at $250,000 per annum. 

Limitations of buying stocks through a broker

Save the commission

A direct purchase plan enables you to invest in a company's share through its transfer agent instead of a broker. In essence, you cut out the middleman and save yourself a pretty penny in the process. Not every company listed on the stock exchange offers these plans. Still, leading industries represented by various participating companies provide you the benefit of choosing the best plan for your investment. 

Have the authority

Stock transactions without brokers are an excellent way to develop your portfolio without too much commitment. And the prime objective of investing through a DRip, DSP, or other specialized services is the ability to eliminate brokerage fees. It is more beneficial for small investors.

Small investments

The prime objective of working without brokers is the benefit of buying a small number of shares with only a little money to invest. Most brokers charge for every transaction, either buying or selling, so you'll need to factor in your return expectations, primarily when you invest in relatively small numbers significantly. The fee remains the same whether the transaction involves a one share or hundreds. 

Investment scams

Although there are countless scam cases among brokers, many investors look for companies that sell their shares directly to the public. The investors can reduce the risk of falling prey to an investment scam through various plans. Investors can look out for a broker through a friend referral and conduct thorough research to avoid investment scams. 

Final Verdict

Over the years, there has been no better to multiply your wealth and assets than investing in the stock market. The companies either offer a direct stock purchase plan, dividend reinvestment plan, or hire a broker. It is effortless to get enrolled in any of the programs; the administrative column shows it all. 

Whenever you choose any investment company, scrutinize the company and the industry in terms of profitability, anticipated outlook, and whether the investment is perfectly aligned with your goals and risk tolerance. Remember, this avenue is best for those eager to do the research and be their own financial advisors. 

Don't forget the age-old admonishment: never put all your eggs in the same basket. If you decide to invest in individual companies, make sure to invest across an array of industries for a diversified portfolio