Many companies offer direct purchase plan or a dividend
reinvestment plan through a transfer agent. The transfer agent, such as
Computershare, AST or Broadridge, maintains records relating to ownership of
the stock. To find your favorite company’s transfer agent, check the investor
relations section of the company website. For this example, let’s look at
Disney.
Disney’s transfer agent is Broadridge. To buy shares, you
will have to open an account on stockplans.broadridge.com. The application will
need your personal information and bank information to transfer funds to
purchase the stock.
The exact process will depend on the company you are trying
to invest in, but many large companies typically allow you to invest any day.
Some companies restrict it to once a month, but the transfer agent will handle
the trade.
Fees are unique to the company as well. In our Disney
example, there will be a $20 account opening fee, plus $20 for each purchase
order. Besides the tedium of opening accounts for each investment, fees are the
biggest drawback of buying stock this way.
Once your money is invested, you may have the option to
order a paper certificate. This is the ultimate novelty in investing and is
actually a lot of trouble to handle. If you really want to be able to hold a
piece of a company in your hands, this is the only way to do it!
Again, I do not actually advise buying stock in this manner
except for the novelty value.
Additionally, do not buy a stock unless you have done your own research
into the risks and potential rewards that it offers. I will follow up with more
practical and effective ways to buy stock.