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Learn How to Buy Stocks With Zero Commission

Jun 18, 2008
Did you know that you don't always have to pay a commission to buy stock? Some companies will allow you to buy and sell their stock directly from them and if you choose this method, you will not have to pay any commission to a broker. This is not something that every company allows though, and so you will need to do some research to find out if the comapny you wish to invest in offers this plan.

This is great for beginners and anyone who just wants to buy a few shares. Many American companies have this sort of plan which is called a Direct Purchase Plan. Some of the top corporations who have this type of direct purchase plan are Chevron, Pfizer, JP MorganChase, and others.

If you are looking for this type of company, you might contact the investor relations department of the company you wish to buy stock of to find out whether they will allow you to buy their stock directly from them. If they do, they will be able to send you all sorts of information that will help you invest.

When you do find a company that does have a direct purchase plan, you should also request a prospectus about the program to find out what it's limitations are. Some programs require that you already own some stock before you are allowed to purchase more through the program.

Many companies allow you to buy more shares with no commissions with the dividends you earn on your existing shares. This is very nice for someone who wants to accumulate shares over time. It can be set up so that all your dividends are automatically used to buy more of the company stock. You will then start to accumulate stock shares at different prices over time depending on their price when they were automatically purchased.

If you end up enrolling in a corporation's direct purchase plan, you will probably get a statement every time you make a transaction with them and you will get a 1099 tax form at the end of the year detailing your activity. This will be an additional item that you have to keep track of separate from you brokerage statement. However, you may be able to sign up for the program through your brokerage account in which case everything will be neatly taken care of there.

Buying stock through a direct purchase plan is a great way to get involved in the stock market if you are just starting out. The stock market for beginners is something that you will need to invest a lot of time researching and this is just another of the many ways to get involved.
About the Author
Learn more about the stock market at my website Stock Market For Dummies. I have lots of information for beginning investors at Stock Market For Beginners.
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