Wednesday, June 03, 2015
Buying stock through a company’s transfer agent used to be a common way to accumulate wealth in American companies. Occasionally I see quite valuable certificates that were passed on after decades of investing. Today, however, buying stock this way is a cumbersome, expensive option compared to using a discount broker.
Discount brokers, such as Charles Schwab or TD Ameritrade offer low or no account minimums ($1,000 for Schwab, $0 for TD Ameritrade), access to just about any stock you might want and easy to open, user-friendly online accounts.
Most online brokers offer some sort of filter or screener to help you find stocks with characteristics you are interested in. After that, there is research and recommendations on many individual companies. Many brokers also offer education and training resources to help guide you through the process.
Discount brokers are a low cost way to purchase stocks. Commissions are under $10 for the most part and there are typically no annual fees. Between the online account and monthly statements, there are plenty of ways to monitor and analyze your purchases.
Opening an account at a discount brokerage is a practical way to buy and manage a stock portfolio. Only invest with money that you do not anticipate needing for at least 3-5 years. Never buy a stock unless you have done your own research into the risks and potential rewards that it offers. Additionally, for most investors, it may be more practical to invest in stocks through a fund, which I will discuss in more detail later.
Please note that besides a reminder to keep fees low, this is in no way actual investment advice. Selecting appropriate stocks and building a portfolio to match your needs is a process that is well beyond the scope of this article. While some people may invest for “fun” with small amounts of money, remember that all of your money in the stock market is at risk. Consult a professional if you do not understand the risks yourself.