How to Buy Stock With or Without a Broker

This is Jeff Rose. Welcome to goodfinancialcents.com.
A lot of times if you’ve been doing something
for a while, you tend to take things for granted.
I got a call from a prospective client, someone
I’ve known for several years. They called
me to ask me a question that I just thought
everybody knew. It was such a basic question
when it comes to my profession that, like
I said, I just took for granted and thought
that everybody knew how to do it. The question
was how do I buy stock or how do I invest
into stocks? I thought really, you don’t know
the answer? Like I said it is just something
that I just assumed everybody knew. So I just
thought I would take a minute and address
some of the different ways, if you are interested
in buying stocks, you can.
To give you some background on the person
that called, they were in a 401K so they were
investing for their retirement, but they never
actually had gone out to invest into individual
stocks. There was a certain stock that they
were hot on and thought that they could make
some money on so they wanted to go buy it.
I gave her a few different areas, a few different
places that she could go to do her own research
and buy the stock.
First, if you’re looking to buy stocks, make
sure that you’ve got a foundation set. I always
hate it when people call me and they want
to start investing in individual stocks and
yet they don’t have anything saved in retirement.
They don’t have a 401K. They don’t have
an IRA. They don’t have anything. They don’t
have an emergency fund, yet they want to start
investing and playing in the stock market.
That’s one of my biggest pet peeves. It’s
like a house, right? With a house you have
to build a foundation first. You don’t start
putting on the roof or start doing the inner
accessories like the big screen TV and the
couches before you have the frame work or
foundation down. Make sure you have those
in place first before you go out and start
buying stocks. That’s my entry disclaimer,
but I just wanted to get that out there first.
Now if you’re ready to start buying stocks
and you feel comfortable doing this, you have
a couple different areas online you can go
to. The first place you can go is any discount
broker. Think eTrade, ShareBuilders, Zecco,
TradeKing, and I’m sure there are countless
others, but these places are good. One, they’re
very, very inexpensive. Sometimes you can
open accounts for free. Then to execute the
trade, to actually buy the stock you may pay
as little as $7.95 on up to 15 bucks per trade.
That’s pretty reasonable, especially if you’re
only going to be doing a few trades here and
there. Some of them, and I’m not familiar
with all the rules, but they may charge you
an annual fee if you don’t do a lot of trading.
Definitely read all the fine print and rules
before you engage on this. If it’s something,
that you’re going to buying a few stocks here
or there, that could be a viable option.
Another option if you’re comfortable making
the purchases online is to actually buy it
through the company itself. One website that
has a lot of arrangements with a lot of different
companies is Computershare. A lot of times
when I have clients that have a share of stock
that they either inherited or it was given
to them, a lot of times computershare.com
is the custodian. They will have to call them
to liquidate it or to find out how many shares
they own. Computershare just seems to be a
common hub for a lot of these different companies.
How I’ve recently had some more relationship
with Computershare was I wanted to buy stock
for my kids, not so much as an investment,
but more of a keepsake. I wanted to buy a
share, put my son’s name on it as in the form
of a custodial account. They had the actual
certificate, something we could frame and
put it on the wall and have a keepsake. I
was having difficulty trying to find a certain
stock that I wanted to buy. Sure enough I
went through Computershare and they had an
arrangement with that company so I’ll be doing
that soon.
Computershare has a relationship with a lot
of those companies. You can go to computershare.com
and follow their links. I think you go to
investor’s center and from there you can see
some of the companies that they have an arrangement
for. I think it’s over 500 companies. I’d
have to check the website just to double check,
but that’s another venue that you can go.
I think it’s maybe a $15 transaction charge,
so once again very minimal cost to do it.
It’s another good, do-it-yourself, online
arena where you can go to buy individual stocks.
Okay, if you still want to buy stocks and
you’re not completely comfortable going online
to do it, I don’t blame you. That can be intimidating
for a lot of people. You have to open up an
account online, send some money to some faceless
operation. The other option you have is you
could probably go to a local investment house,
local stock broker and buy stock through them.
Just so you know, by going that direction
you’re probably going to pay more, considerably
more, but at least you have a face of someone
you can talk to. They can share their expertise
of what you think is going to make you a lot
of money, if it really is. Also, you have
somebody that hopefully is going to educate
you in having that foundation set.
All these different brokerage firms differ
on their prices, but I have to think at minimum
you’re going to be spending about $40 per
transaction. So if you buy a certain number
of shares it’s 40 bucks. If you sell again
it’s another $40. That’s for a smaller amount
transaction. The higher transaction you go,
the more shares you buy, or the higher the
share price is will then determine how much
you’re commission is going to be. Some of
these firms as well, if you don’t trade frequently,
they are going to hit you with either a small
account fee or an inactivity fee. Be conscious
of that. It’s definitely not the cheapest
direction to go. Typically when I’m working
with clients and if they want to do some stock
trades or they have a younger relative or
their kid that wants to buy shares of stock
and that’s all they want to do, I usually
will guide them to one of these online platforms
if they are comfortable just to help save
them a few bucks.
Those are some of the different options you
have. If you want to buy stock, you can go
online to one of the online discount brokers
or go to computershare.com. If you’re not
comfortable head to your local brokerage.
Then, when you shop around I would maybe interview
one or two different brokers just to see what
would be the potential cost to do so. I would
just say, “Hey, how much would it cost to
buy 100 shares of…..” and just give them
some stock, maybe the stock you’re interested
in, just to see what it is and how much the
fee is going to be. You want to make sure
you know what you’re getting yourself into.
Make sure you read the fine print before you
proceed and make that initial investment.
If you have other questions about anything
similar to this, you know where to find me,
goodfinancialcents.com. I have tons of information
there. Also be sure to check us out on Facebook
at the Good Financial Cents Facebook fan page.
Thanks again. We’ll be talking to you soon.
The opinions voiced in this material are for
general information only and are not intended
to provide specific advice or recommendations
for any individual. To determine which investment(s)
may be appropriate for you, consult your financial
advisor prior to investing.