When you’ve got a chunk of money to invest, the stock market is a good way to go. Most of the advice out there will tell you that you should find a stockbroker to invest the money for you because they know what they’re doing. While it’s true that it’s risky to do it yourself if you don’t know which investments are smart, you don’t always need a broker.
They’re going to take a cut of any profits that you earn and even though you’ll still be making money, you could be making more if you bypass the broker and make your own investment decisions. Stockbrokers would have you believe that you can’t do it without them but you can, you just need to do a bit of research into where to buy stocks and how to find the best tips.
Here’s how you can invest in stocks without a broker.
Finding Safe Investments
The main reason that people go to a stockbroker is that they’ve got knowledge of the market and they spend all day every day poring over the figures and working out the best place to put your money. However, there are places that you can find good information on the best stock options.
Financial screeners like the covered call screener allow you to set specific criteria and then filters through the stock options to give you great advice on where to put your money. This is essentially the same service that a stockbroker offers, but you won’t be losing a big chunk of your profits. They offer a free service but if you want more detailed information, you can pay a subscription as well. It’s still costing you a bit of money but nowhere near the cut that a broker will take out.
Direct Stock Purchase Plan
The other reason that people use a broker is that they think that you can’t buy stocks yourself, but that isn’t necessarily true. While there are some companies that will only sell stocks through a broker, most offer an alternative that lets you do it directly. A direct stock purchase plan is the easiest way to do it, and it’s aimed at smaller investors.
You only need to make a minimum purchase of between $250 and $500 most of the time, or you can sign up to $50 a month for a certain period. There are still a few administrative costs involved but it’s only going to be a dollar or two per share which is way cheaper than going through a stockbroker.
Dividend Reinvestment Plans
A dividend reinvestment plan allows you to take cash dividends from stock you already own and then put it back into buying more stock instead of taking the cash value. The obvious issue here is that you need to have the stock in the first place but you can get it through a direct stock purchase plan, or through gifting services.
Even companies that don’t usually sell stocks freely sometimes offer a gifting service that allows you to buy one or two stocks. Once you’ve got your foot in the door, you can use dividend reinvestment to get more. However, you should be aware that as the financial market moves away from paper stocks, these gifting services are becoming rarer.
If you invest a bit of time in some research you can absolutely buy stocks on your own without a broker and keep all of the profit for yourself.