How to Invest in Stocks Directly

If you felt burned by the stock market following the financial crash of 2008, you are not alone. The financial crash of 2008 left many wary of investing in the stock market and working with stockbrokers. In recent years, however, the investment landscape has undergone a transformation. Between the internet and numerous investment apps, it is possible to purchase stocks directly online without a broker. As a result, you have more flexibility in what you trade, when you trade and how much you pay in fees.

Whether you own stock or are looking to buy stock for the first time, it is worth considering whether buying stocks directly is right for you. Read on to learn more about your options for buying stocks without a broker.

Best Ways to Buy Stocks Without a Broker

There are numerous options if you want to buy stocks without a broker. Companies offer stock-purchasing plans that vary depending on if you are an employee of the company.

 If you are an employee, you can purchase company stock directly through a variety of options such as a direct purchase plan (DPP), a company stock purchase plan (SPP) or a company stock option purchase plan (SOPP). These plans typically allow employees to buy shares in a company without paying brokerage fees or requiring a brokerage account. Though the cost of investing is lower, most DPPs, SPPs and SOPPs include limits to both the amount of stock you can purchase as well as the amount deducted from your monthly paycheck. This can limit your potential returns. 

If you are not an employee, you can buy stock from a company directly through either a Direct Stock Purchasing Program (DSPP) or a Dividend Reinvestment Plan (DRIP). By purchasing stock through a DSPP or DRIP, you can bypass brokers and brokerage fees to buy stock directly from your company of choice. 

Best Ways to Buy Stocks From a Company Directly

The best ways to buy stock directly from a company are a DSPP and DRIP. Both options allow you to have more choice and control over what you invest, how much you invest and how long you invest.

1. Direct Stock Purchasing Program (DSPP) 

A DSPP allows you to purchase stock from a company directly without having to pay commissions to a personal or online broker. Typically, the company you’re investing in will take a specified amount regularly from your checking or savings account. You can also make larger

one-time purchases instead of monthly amounts. If your company pays dividends, you also can reinvest your dividends back into the company by purchasing stock. DSPPs are an attractive, low-cost option to individuals who want to purchase stock from companies that they trust while retaining a high degree of self-directedness. 

2. Dividend Reinvestment Plan (DRIP)

Companies distribute their profits to shareholders through dividends, or corporate payments, to encourage continued investment in their company. If you are a shareholder with a DRIP, you can continue purchasing company shares instead of receiving cash dividends. Since DRIPs don’t require a broker, you forgo broker fees and commissions, reducing the costs of investing. 

If you have a DRIP, you purchase fractions of shares rather than whole shares. This means that the amount of a stock you purchase is smaller because you will be buying parts of shares instead of the whole amount. However, a DRIP is advantageous for individuals who wish to stay with a stock long-term and maximize compound returns. 

Is it a Good Idea to Buy Stocks Without a Broker? 

Online brokers can offer you many advantages that traditional brokers do not:

• Save you money and time with lower brokerage fees and real-time access
• Reduce the personal biases of brokers who promote standard investment packages
• Are convenient, allowing you to make trades from anywhere with internet access
• Provide analytical tools that can help you evaluate common stocks and preferred stocks to see which is a better fit for your investment goals

Investing with online brokers can have disadvantages:

• May be overwhelming for new investors with little to no market knowledge
• May be addictive, causing investors to spend too much too fast
• Allow you to make trades without considering how it affects your overall strategy
• Are dependent on computers and vulnerable to computer errors

If you decide to trade with an online broker, remember that you will have to put in the time to do research, develop a strategy and make adjustments along the way if you want to see a return on investments. 

Best Commission Free Brokers to Buy Stock

Commission-free brokers are a great choice if you’re looking to capitalize on the flexibility and lower-costs of online brokers. Some of the best commission-free brokers are:

Best For

Intermediate Traders and Investors

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get started securely through Webull’s website

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Best For

Intermediate Traders and Investors

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Webull, founded in 2017, is a mobile app-based brokerage that features commission-free stock and exchange-traded fund (ETF) trading. It’s regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).

Webull offers active traders technical indicators, economic calendars, ratings from research agencies, margin trading and short-selling. Webull’s trading platform is designed for intermediate and experienced traders, although beginning traders can also benefit.

Webull is widely considered one of the best Robinhood alternatives.

Best For

• Active traders
• Intermediate traders
• Advanced traders

Pros

• No account maintenance fees or software platform fees
• No charges to open and maintain an account
• Intuitive trading platform with technical and fundamental analysis tools

Cons

• Does not support trading in mutual funds, bonds or OTC stocks

Best For

IPO Investing

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get started securely through SoFi’s website

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Best For

IPO Investing

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SoFi’s mission is simple: to help reach clients like you reach their financial independence and realize their ambitions. SoFi knows that this independence comes from making decisions that help your money start to work for you in the long run. The brand helps individuals make these decisions through personal financial products such as personal loans, student loans and automated and active investing. 

The brand additionally provides in-person experiences such as educational and networking events, personalized guidance from experienced financial planners and one-on-one advising with professional career coaches. SoFi’s services have been highlighted in outlets such as Forbes, Medium, and CNBC’s Make It.

Best For

• IPO Investing
• Mobile Investing

Pros

• U.S.-based customer service
• Highly-rated mobile app for iPhone and Android

Cons

• Only available in the U.S.

Best For

Active Traders

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get started securely through Moomoo’s website

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Best For

Active Traders

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Moomoo is a commission-free mobile trading app available on Apple, Google and Windows devices. A subsidiary of Futu Holdings Ltd., it’s backed by venture capital affiliates of Matrix, Sequoia, and Tencent (NASDAQ: FUTU). Securities offered by Futu Inc., regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).

Moomoo is another great alternative for Robinhood. This is an outstanding trading platform if you want to dive deep into smart trading. It offers impressive trading tools and opportunities for both new and advanced traders, including advanced charting, pre and post-market trading, international trading, research and analysis tools, and most popular of all, free Level 2 quotes.

Get started right away by downloading Moomoo to your phone, tablet or another mobile device.

Best For

• Cost-conscious traders
• Active and Advanced traders

Pros

• Over 8,000 different stocks that can be sold short
• Access trading and quotes in pre-market (4 a.m. to 9:30 a.m. ET) and post-market hours (4 p.m. to 8 p.m. ET)
• No minimum deposit to open an account.

Cons

• No chat support

Best For

Sign Up Bonus

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Get started securely through Axos Invest’s website

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Best For

Sign Up Bonus

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It seems like new digital investment management platforms are sprouting up left and right, and for good reason — there’s a great need for easy, straightforward investment management that doesn’t cost an arm and a leg in fees or to get started. If you’re new to investing or an old hat who wants to make the switch to a virtual manager, deciding which features you need can be confusing if not overwhelming.

If you want a no-frills financial management platform, Axos Invest (formerly WiseBanyan) takes a traditional but sophisticated approach to automated online investing.

Best For

• Traditional investors trying out an automated investor for the first time
• New investors that want to take a hands-off approach to portfolio management

Pros

• Straightforward automated investing
• Relatively low account minimum and automated investing fee
• A solid roster of available investment account types

Cons

• Not a stand-out from other services if you’re someone who likes all the bells and whistles with your digital financial platform
• No direct relationship with a human financial advisor

Best For

GlobalAnalyst Product

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get started securely through Interactive Broker’s website

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GlobalAnalyst Product

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This latest groundbreaking technology is IBKR GlobalAnalyst, a new trading tool that helps investors compare the rate of PEG or price-earnings growth valuations and provide more immediate and comprehensive financial metrics of stocks, globally.

Recognizing that stock selection can be challenging for investors to compare the valuations of domestic and international stocks, Interactive Brokers created GlobalAnalyst to offer investors a simple, yet powerful tool to easily evaluate investment opportunities around the world.

Using GlobalAnalyst, investors can search for stocks by region, country, industry, market capitalization and currency to uncover undervalued stocks worldwide. The resulting table displays the current market and financial metrics, including the PEG Ratio. The PEG Ratio is the PE ratio divided by the three-year compound earnings growth rate, and smaller PEG Ratios typically indicate undervalued companies.

Best For

• Price earnings growth valuations

Pros

• Easily evaluate investment opportunities

Cons

Best For

Copy Trading

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get started securely through eToro’s website

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Disclosure: eToro USA LLC; Investments are subject to market risk, including the possible loss of principal.

Best For

Copy Trading

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eToro is a broker that offers access to over 25 of the world’s most popular cryptocurrencies, forex and over 1600 stocks. They have a few unique education and useability tools. Traders can begin buying and selling in as little as 10 minutes.

eToro’s unique CopyTrader feature allows new investors to “copy” the buy and sell orders of professional investors, while the company’s eToro Club feature provides investors with a range of additional education tools and resources. 

Best For

• Traders looking for an easy-to-use platform
• Traders who want to practice their trades using a virtual account before entering the market

Pros

• Simple platform that is easy to master
• CopyTrader feature that allows new traders to copy the same strategies used by professionals
• Virtual dummy account that gives you $100,000 to practice trades

Cons

• High non-trading fees

While many brokers are commission-free, it does not mean you won’t be paying fees to use their services. Brokers may charge other fees such as per-contract fees, account maintenance fees, account transfers and withdrawal fees among others. When researching a broker, make sure to take into account all fees associated with their services to see if they are a good fit for your needs.

If you’re ready to start dipping your toes back into stock market investing but want to retain your independence, you have some choices. You can invest in a stock or company directly through a variety of plans depending on whether you are an employee of a particular company. Alternatively, you can turn to the convenience and services offered by an online broker. Both options provide you with more flexibility and control over your trades and investments.

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