Companies pay the services of a transfer agent, when they list themselves on a stock exchange. 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 by a range of participating companies. This provides you ample room to choose.
The minimum investment required for investing in direct stock purchase may vary. 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 debit, 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 by 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. Also, here dividends can be reinvested.
However, some companies 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. 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 across a range of industries for a diversified portfolio.