Review of direct broker::I am a freight broker looking for a list of shippers. Does ...
Review of direct broker::I am a freight broker looking for a list of shippers. Does ...
For many of us, participating in the stock market is an expensive proposition and oftentimes seemingly "out-of-reach" with the money we have to invest. Here are two ways you can participate in the stock market that won't cost you a lot of money, and just might help you build assets with your hard-earned money! DRIPS - Dividend Reinvestment Plans Dividend reinvestment plans, or "DRIPS", provide the individual investor a way to purchase shares of stock in a company at relatively low cost compared to buying shares through a broker. DRIPS allow you to buy additional shares in a company with little or no commission. The primary difference between DRIPS and direct purchase plans is that, with most companies offering DRIPS, you must already have purchased stock in the company. As opposed to sending out dividends checks to shareholders, reinvestment plans automatically purchase additional shares in the company stock. DRIPS provide a painless way to build a position in a stock you are holding in your portfolio. If your strategy is to buy-and-hold, this is a very good way to go. When considering stocks purchases for your portfolio, a company that offers these types of plans is an added positive factor if you are considering buying. The usual requirement for DRIPs is that you own at least one complete share of stock in the company before you can participate in the reinvestment plan. Components of a dividend reinvestment plan include eligibility requirements, costs, and any options that may be available, including reinvestment of dividends on shares purchased. (Reinvesting dividends is a most effective and painless way to build assets, whether or not you decide to participate in a DRIP plan. Along with reinvesting capital gains, reinvesting dividends is a classic way to build wealth.) Many of these types of plans also allow the investor to buy additional shares by buying directly through cash payment to the administrator of the plan; however, there is usually a maximum dollar amount limit with this option. In addition, with many of these plans, there is an option also for automatic investment, whereby a given amount is automatically transferred from the participant's checking or saving account at regular intervals for the purpose of additional share purchase. (Like reinvestment of dividends and capital gains, automatic investment plans, whether or not tied to a DRIP or direct purchase plan, are an excellent means of painlessly building assets.) Direct Purchase Plans Direct purchase plans, unlike DRIPs, do not require you to initially buy shares of company stock through a broker before participating subsequently in a reinvestment plan. With a direct purchase plan, you can completely bypass broker transactions. Numerous companies in the United States offer these types of plans, however, there are minimum amounts required to participate, anywhere from $10 to $3000. A median minimum cost for direct purchase is approximately $250. In addition to individual companies, many investment firms now offer their own version of such plans, allowing you to reinvest dividends of stocks you hold in your account in additional shares, or fractional shares, with little or no additional fees. If you are account holder with a firm that offers a dividend reinvestment option when you buy your shares, by all means take advantage of this opportunity. Both DRIPs and direct purchase plans are a good fit for the investor who is willing to buy and hold their shares in a company over the long term, the process of incrementally adding shares over time through these programs allowing the investor to build substantial positions in selected stocks. Two recommended sources of information for investigation of companies that offer DRIPs and direct purchase plans are: DRIP Central.com (http://www.dripcentral.com/) - This site provides extensive online resources for finding and reviewing companies that offer both DRIPs and direct purchase plans, and also introductory information on how the process of direct investing works. DRIP Investing - Direct Investment Plans & Dividend Reinvestment DRIPs (http://www.directinvesting.com/) - This site provides a search database for companies offering DRIPs and direct purchase plans, information about these companies and also how to get started. Sources: AAII Journal, June 2003, "Investing in DRPS: A Guide to Dividend Reinvestment Plans" AAII Journal, June 2006, "Bypassing the Broker: AAII's 2006 Guide to Direct Purchase Plans" |
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