To the best of our knowledge, once the companies list themselves on a stocks exchange. They employ the services of a transfer agent, who handles all administration related to sharing transactions. Here large numbers of listed companies make use of Computershare to provide these services. The administrating of direct stock purchase plans for companies who want to sell their shares. To the public without engaging a stockbroker is one of the roles provided by Computershare.
If you want to buy a stock instead of through a broker, then it is possible with a direct stock purchase plan that allows you to buy shares of a company through its transfer agent. In this way, you can cut out the middleman and save yourself a pretty penny. However, not all companies listed on the stock exchanges offer these plans. But you can spot some of the major industries represents a range of participating companies. This provides you ample room to choose.
Following are some of the features of direct stock purchase plans that each one of us must be aware of;
Indirect stock purchase plans, minimum investment amounts are variable. However, it can be adjusted to meet your needs. Usually, they range between $25 and $2,500.
You can make the payments by check, automatic bank debt, or a combination of both.
Purchases can be scheduled weekly or monthly those allow you to dollar-cost average and potentially reduce risk.
Direct stock purchase plans allow you to invest in small amounts, rather than investing in a number of shares. When your purchase amount does not afford to buy a full share, then you can get fractional shares that still earn dividends.
Here dividends can be reinvested.
There exist some companies that do not charge fees for stock purchases. In many cases, companies neither charge account set-up nor dividend reinvestment fees. When you select any investment, then you need to analyze the company. Not only have you needed to analyze the company but also the industry carefully in terms of profitability, future outlook. You must also check whether the investment is in line with your goals and risk tolerance. As we know that the investing via direct stock purchase plans can be more advantageous than going through a broker, so you may miss out on your broker’s advice. Always keep in mind that this avenue is best followed by those who are willing to do the research and be their own financial advisor.
On a serious note, you must never forget the age-old caution, which says, never put all your eggs in one basket. When you choose to invest in individual companies, you must ensure that you invest in a range of industries for a diversified portfolio.