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Going for Broke: Things to Consider When Investing Without a Broker

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Most investors work with a broker to help them find and purchase the right stocks for their portfolio. However, you can go it alone if you prefer. When investing without a broker, there are a few things you need to consider to ensure your money is as safe as possible and make it work hard for you.

Understand How to Buy Stocks Through a Direct Stock Purchase Plan

Many companies listed on the stock exchange allow you to buy shares directly from their transfer agent, without using a broker. This process cuts out the middleman and can lead to you saving a lot of money in broker’s fees. However, not all companies listed on the stock exchange offer a direct stock purchase plan. To find out whether a company you want to invest in allows investors to buy shares in this way, go to the company website and look for a section titled “investor relations“.

Consider the Direct Stock Purchase Plan Fees

The fees you have to pay to open and use a direct stock purchase plan depend on the company you want to invest in. In general, most direct purchase plans carry a fee for setting up the account, which is usually between $5 and $20. You can also expect to pay transaction fees ranging from roughly $0.03 to $0.10 per share when buying shares and $15 plus $0.12 per share when selling shares.

Decide How Much You Can Afford to Invest and Over What Time Period

Investing in stocks can be a good way to grow your wealth, but it’s important not to overstretch yourself by investing more money than you can afford to lose. Remember that the value of shares can go down as well as up, so you must not assume that you can pull your money out of stock market investments whenever you need the cash. Keep an emergency fund in an instant access bank account so you always have enough money on hand to meet unexpected costs. Next, decide whether you want to invest over the long or short term. Investing over the long term can be a lot more efficient, as you only have to pay fees when you buy or sell shares, not while you are holding them.

Decide How You Want to Make the Payments

Direct stock purchase plans typically accept payments by automatic bank debit or check. Consider how you will make the payments, while ensuring that you always retain enough cash in your bank account to cover your regular outgoing bills, and check that the direct purchasing plan you want to use accepts your preferred method of payment.

Consider Scheduling Your Purchases

One method of investing, which is known as dollar-cost averaging, involves purchasing a small number of shares on a regular basis, such as every week or every month, rather than buying all the shares you want to own at once. This method of purchasing shares can reduce the risk of losing money, as your initial investment is spread over several months, so there is a much lower risk of buying shares while their price is at a high point. Many people regard this to be a much safer method of investing than trying to guess when the share price is at a low point and schedule your buying to coincide with it. Many direct stock purchase plans allow you to automatically schedule your share purchases for every month or week.

Get Advice on Your Investments

Being a successful investor relies on choosing the right shares to invest in. Making the right decision can be the hardest part of investing, so you need to seek out and listen to expert advice. A good starting place is to get advice from Money Morning, which offers regularly updated tips on the best stocks to buy. Follow industry news to find out which companies are predicted to grow, so you can decide which ones offer the most attractive shares.

Conclusion

Investing without a broker can be very financially rewarding, but it also presents risks that you need to take into account. Always plan your investment budgets and schedules carefully and get advice so you don’t make the wrong decisions. When you know which companies you want to buy shares from, check their websites to see whether they offer direct stock purchase plans. Although these plans usually charge small fees, they can be a much less expensive option than purchasing shares through a broker, giving you the opportunity to make more money from your investment activities.

Peter Berry is knowledgeable in trading stocks and shares and enjoys helping others when it comes to investments. He regularly writes about investing, small/startup businesses and technology.

 

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Extended Warranty to the Rescue!!!

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Back when we bought our new-to-us (then only 1-year-old) car, we added all the warranties on top of the sales price and financed it all together.

Remember, this was back before any debt-reduction mission or such. After listening to Dave Ramsey, I’ve now learned that the majority of extended warranties are a total waste of money (disclaimer: I don’t blindly believe everything Ramsey says, but I do believe this one).

Even so, when we finally paid off the car this past January I never took any steps to cancel the extended warranty so I could be reimbursed for the pricey policy. I just paid it off and went on about my life.

Fast forward to this month. Out of nowhere, we’ve experienced some random electrical issues. Unfortunately, a lot of the car’s displays are electronic. At this point, the entire dash is out. That means I cannot control A/C, we have no radio, there’s no time display, no backup camera, and more. Though most of it is just an inconvenience, some of it actually poses health and safety hazards. For instance, I’ve been driving my girls around this week and they’re crying in the backseat that they’re all sweaty (here in Tucson we’re still over 100 degrees every day). The A/C was on when the dash electronics went out, but it was set to low. Without the electric display, I have no way to change the A/C to be higher or lower and the heat is so all-encompassing that it literally feels borderline-dangerous to be driving the kiddos around without proper air.

After calling a couple shops and discovering that this is most likely a dealership issue (= $$$), I remembered that we had bought an extended warranty that specifically covers the electrical components on the vehicle.

“There’s no way the warranty is still effective”, I thought. We’ve owned the car for just at 3 years now, but we’ve already hit over 100,000 miles. I was imagining the warranty was probably nullified right around the 3-year and 100,000 mile mark.

So, imagine my surprise (and joy!) when I called and discovered that the extended warranty actually covers up to 5 years or 125,000 miles!!! We’re still under warranty, baby!!!

The other issue is that when I was calling around to shops, I was not only stressed about the money, but also the logistics. From what I was told, vehicle electrical work can take quite awhile. So either I’m stuck at the mechanics shop all day, or they can bring me back to my house. But that means it has to be a day we have the babysitter (because they can’t transport me + 2 kids in carseats). However, I’ve already determined that it’s tough to work while the kids are at home. So…stuck at the mechanics shop, then?  I know this is total 1st world problems and not really a big deal, but these are the logistics I’m grappling with. HOWEVER, our extended warranty (purchased through CarMax) includes FREE LOANER CAR while they’re doing the repair work!!!

They’ve said they may need to send the car to the dealership (which sounds likely after speaking to several local mechanics shops), but either way CarMax still provides me with a loaner. PLUS, I’ve had 2 recall-related issues pop up within the past few months that I’ve been putting off forever. So I can actually get those issues handled as well. All for $0 out-of-pocket.

My appointment is scheduled for next Thursday so I still don’t know the full amount of time it will take or even the full scope of what the issue is and what needs to be done to repair it. I’m just happy that this dumb (and super $$$) extended warranty is coming in handy! And, I may be wrong, but I believe I could still cancel at any time and receive a partial reimbursement for whatever time is remaining in the warranty. So there’s a chance I may get this stuff taken care of, then cancel the warranty in a month or so, and still end up with money leftover! I don’t want to get my hopes up (because I don’t know for sure if they’ll do partial reimbursements), but it’s an exciting prospect.

Three cheers for an extended warranty that actually came in handy and hopefully saves us some money!

What are your thoughts on extended warranties? Do you buy them? Why or why not?


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