Buying Stocks Without A Full-Service Broker

Especially in today’s unstable and volatile market, investing can be a scary proposition. For many, a broker serves as a guide through the financial market jungle, and is an essential part of a solid investment strategy. For others, hiring a broker is simply the equivalent of handing money to a middleman, and seen as a necessary evil. Is it wise to buy stocks without a broker, or is the broker a source of advice worth paying for?

The decision on whether or not to use a full-service broker is largely dependent upon a person’s level of financial know-how. A broker’s job is not simply to process trades, but to give advice on the best times to buy and sell. Those familiar with investing and the stock market may find themselves comfortable navigating the markets without a broker, and there are a variety of options out there for those who choose to handle their own investments.

The most popular option for buying stocks without a full-service broker is to sign up for an online trading company. There are quite a few out there, including  my personal favorite Tradeking, TD Ameritrade, Charles Schwab, and ETrade. Most advertise low fees and are simple enough for even new investors to get started. For those who are brand new to investing and have chosen the online discount broker route, the advantage of these sites is that they’re a wealth of resources for learning about the market and the process of buying and selling. The important thing to keep in mind when signing up with an online trading site is that the details are all in the fine print. Sites that advertise $1 per trade are able to do so because they charge hefty account setup fees, monthly maintenance fees, and require you to deposit larger sums to fund your account than do sites charging $5 a trade. Some sites are most profitable for those who make frequent trades, and others favor those who trade less often but invest more money. Many people choose a site because it is the most recognizable name, which is not always the best course of action.

Another option is to invest directly via a company’s direct purchase plan. Most larger companies offer this option, where an investor is able to purchase stocks directly from the company, without going through a brokerage firm. Many also offer a dividend reinvestment program, which takes any profit you make from the stock and reinvests it in the purchase of additional stock. These options are easy, require a minimal investment, and are a good way for new investors to get a feel for the market. If an investor takes the time to become knowledgeable about the market, does a bit of research, and makes informed choices, it is entirely possible for him to become successful in managing his own investments without the help of a broker.