Is it Possible to Buy Stock Without a Broker?

Is it possible to buy stock without a broker? The answer is yes. While the easiest and most common way to buy and sell stocks is through a broker, there are several other ways to purchase shares in the market without any third party.

A nice thing about cutting out the middleman (i.e. stock broker) is that investors won’t have to pay commissions on their trades. Depending on the broker, the average commission for placing a buy or sell order probably runs around $20. For small investors, a $20 commission can be about 2% on a $1,000 investment. Considering most blue chip stocks don’t even pay a 2% dividend, this is significant money going out the door.

One way investors can avoid using a broker and waive the commission costs and fees is by opening a direct stock purchase plan (DSPP) with a company. Most companies offers these plans or work with a third party organization to manage the plans. A DSPP allows an investor to purchase shares of stock directly from the company that they are investing in which is a nice convenience.

Each direct stock purchase plan differs from company to company, so it is a good idea to check with each before you make any decisions. The DSPP accounts also allow investors to setup recurring investments each month through an automated withdrawal from a checking account. This is a perfect fit for young investors with little to invest upfront. Partial shares are purchased in the invest the investor does not have enough to buy one share of stock.

The downside of not buying stock through a broker is added complexity. Most online brokerages such as Tradeking, Zecco, or Schwab provide accounting tools and complimentary research materials to their customers. If you intend to only buy one stock this may not be a big deal, but things can get extremely complicated pretty quickly if you are managing a large portfolio of individual stocks without the help of a broker. Investors will need to determine for themselves whether saving a few dollars per trade is worth the extra work involved.