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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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2016 Tentative Financial Goals

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Hubs and I are both natural savers (though, admittedly, he would like to save more than me). So it’s been tough to have such a low EF and throw all of our extra money toward debt lately without having much saved for a rainy day.

That’s all about to change, friends.

Hubs and I have been discussing our financial goals for 2016. We’re still hashing them out so this isn’t a definitive 100% set list just yet. And I welcome your input, too. But here’s what we’re thinking.

  1. Save $10,000 for a down payment. One of our big goals for this year is to buy a house. This gets pretty personal (in terms of personal finance), and I’m sure there are strong opinions all around regarding buying a house while still in debt, but this point is pretty firm in both of our minds. Our price point is the mid-100’s. We want to put 20% down to avoid PMI. To do so, we will use $10,000 (which needs to be earned and saved in 2016), and add to it $10,000 I have currently in a money market account. Yes. I rarely talk about it, but it still exists. Our thoughts are that we’re simply moving the $10,000 from one type of investment (money market) to another type of investment (real estate). In addition to that, my mom has generously offered to gift us an amount (I will not disclose) that should tip us over the 20% threshold and still leave us with funds for closing costs, etc. I don’t want to dwell too much on the gift as, again, this gets pretty personal. We are very grateful for her generous offer and feel comfortable with accepting it because this is something she has always told us about. She made a similar gift to both of my siblings to buy their first homes so this is something she has planned and prepared for for many years. One important note is that our current lease ends in August (though our landlord is very flexible and aware of our plans. He has already told us we could go month-to-month if need be when the time comes). Because we’d like to find a home over the summer, we need to save up that money during the first part of 2016. The sooner, the better. So this goal will heavily impact budgeting during the first half of the year.
  2. Save $5,000 for Emergency Fund. Really all of our savings funds need to be beefed up. As a reminder, I use Capital One 360(<refer a friend link) and have separate accounts for all of our different savings goals. These accounts range from the typical Emergency Fund to a health/dental/vision fund, car repairs fund, Christmas/travel fund, and more. Realistically, I’d like to save more than this (again – we’re savers by nature). But I wanted to start with $5,000 and go from there. We need to save room in the budget for debt!!!! Which brings me to our final goal of 2016…
  3. Put $30,000 toward debt. One of our goals for 2015 was to pay $30,000 toward debt. We did SO GOOD and have come SO CLOSE to meeting that goal. I’d love to have upped this figure to something closer to $40,000ish, but with so much of our money being diverted toward savings in 2016, I think $30,000 is still a good number to stick with. Once the house stuff is all situated, I bet debt reduction progress in 2017 will be gangster-status!

That’s it! It doesn’t take a mathematician to see that $10,000 + $5,000 + $30,000 = $45,000 toward debt and savings in 2016! That is such an insane amount of money! We are eternally thankful for our well paying jobs and relatively low cost of living in the state of Arizona. If you were to tell me three years ago that these would be my goals for 2016 I would have laughed in your face! Thinking back to the two struggling people just trying to get by while caring for twin infants makes my heart hurt. We were drowning in debt, maxed out on credit, and just trying to grasp at that next paycheck. It is no exaggeration to say that blogging here has been absolutely transformative for our family! We have accomplished more than we ever thought was possible!

Yes, we still have a long way to go (nearly $95,000 in student loans remaining). But just looking back and seeing all the progress we’ve made in such a short amount of time (less than 2 years) is so heartening. It just fills me with hope and promise for a future in which we can eventually be fully debt-free. I cannot wait!