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.
