Buying stocks without a broker has never been easier, thanks to the internet and apps.
To explain, algorithms handle almost all the sales of stocks in today’s markets. Hence, you will need no specialized knowledge or skills to trade stocks. Instead, all you need to do is push a button to trade stock.
6 Ways to Buy Stocks Online Without a Broker
- Use a Transfer Agent like Computershare – high commissions
- Use a Direct Purchase Plan Through Your Employer – You need to be employed at the company
- Use a Dividend Reinvestment Plan – Good for dividend investors
- Use your Company Stock Purchase Plan (SPP) – Only for employees
- Use your Company Stock Option Purchase Plan (SOPP) – Only for employees
- Use a $0 Commission Broker – The best option
How Can You Buy Stock Online Without a Broker
You can bypass a broker and buy stock by using a transfer agent, but the costs can be high. You can use direct purchase plans, or stock purchase plans, but you need to be an employee of the company. Honestly, you are better off using a broker that offers $0 commission for trades, for flexibility, liquidity, and no costs
The Problem with Buying Stock without a Broker
There are serious obstacles that can bar the average person or retail investor from the stock market. Transaction fees, hidden fees, and trading fees can eat up all or most of your profit, for example. Also, brokerages, exchanges, and regulators often place severe restrictions on individual traders.
Thus, always research stock purchases carefully before entering the market. A little knowledge can help you avoid high fees and ridiculous restrictions.
Do I Need a Broker to Buy Stock?
No, you do not need a broker to buy stock. However, most people will need a brokerage account to buy and sell shares.
A broker is an investment professional who has licenses to trade stock and gives financial and other advice. On the other hand, a brokerage is an organization with the legal right to trade stocks in exchanges.
A brokerage account is a gateway that gives customers access to the exchange. Therefore, anybody can buy stock through a brokerage account.
Historically, only rich people and investment professionals could get direct access to the stock markets. Under those circumstances, most people needed a broker to trade stocks. The broker purchased the stock on the individuals’ behalf.
Why Do I Need a Brokerage Account but not a Broker?
Many brokerages will make brokerage accounts available to anybody with the money to pay for stocks. Companies like TD Ameritrade and Charles Schwab are really selling brokerage accounts to the public. In addition, app-based solutions like Robinhood and Acorns are brokerages investors access via an app. Such companies are technically brokerages, but they allow direct purchases of stock by individuals.
However, many brokerages have brokers available for those who want advice or help. On the other hand, most of the stock purchases made through so-called discount brokerages online are direct individual purchases.
Traditional stockbrokers are very rare in the modern world. Instead, most of the professionals are investment advisers who offer a wide variety of services, including financial and retirement planning and tax advice.
5 Reasons You Should Open A Brokerage Account?
Now that many brokerage services offer commission-free stock trading, there is actually no reasons to avoid brokerages.
- If you choose the best broker with commission-free trading, you avoid all costs of buying and selling stocks and ETFs.
- Good brokers complete your end of year tax forms and allow you to perform tax-loss harvesting free of charge.
- You get access to highly efficient and liquid markets, allowing you to sell quickly and effortlessly.
- All good brokerage accounts allow you to re-invest your dividends automatically.
- The spread between bid and offer prices with mainstream brokerages is negligible; this saves you money.
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Can I Buy Stocks Without a Broker or Brokerage Account?
Yes, you can buy stocks without a broker or a brokerage account using a Transfer Agent, a Direct Purchase Plan, a Dividend Reinvestment Plan, or a Company Stock Purchase Plan.
However, today’s market limits the variety and amount of stocks you can buy without a broker.
Generally, people who do a lot of stock trading use a brokerage account because it makes life easier. Specifically, you can buy or sell stock quickly through a brokerage, and most brokerage accounts let you buy most stocks that trade on big exchanges.
However, there is no law against an individual purchasing stock directly from a company or owner. Indeed, there are legal mechanisms that allow private individuals to buy stock directly without a brokerage account.
Therefore, you can purchase stocks online without a brokerage account. In fact, some services allow you to buy shares of stock directly from companies. Plus, most of these services will allow individuals with a bank account or credit card and an internet connection to buy stock.
Additionally, there are companies that sell their stock directly to the public. However, most of the companies use services like Computershare to sell that stock.
How to Buy Stocks Without a Broker
There are a few ways that almost anybody can buy stocks without a brokerage account. Notably, some companies allow individuals to purchase their stock directly through special programs. Specifically, many companies allow employees to purchase stock without a fee.
For instance, companies like the giant American grocer Kroger (NYSE: KR), allow any employee to purchase stock. Notably, union contracts at some companies require management to make stock available to all regular employees or union members.
In fact, stock options, the right to purchase stock without paying a fee, is a popular fringe benefit at many companies. Many executives take most of their pay in the form of stock options.
Beyond dividends, there are plans that allow you to purchase specific stocks without a brokerage account. The advantage of these arrangements is that you can buy stock without paying a fee. The drawback to such schemes is that they usually limit you to purchasing one specific stock.
Dividend Reinvestment Plans (DRIPS)
For instance, a Dividend Reinvestment Plan, popularly called a DRIP, allows stockholders to purchase additional shares with dividends.
The advantage of a DRIP is that you can compound your dividends into more stock. The disadvantage of DRIPs is that the amount of stock you purchase can be small.
Generally, a DRIP will only pay off if you plan to keep the stock for a long time. To explain, it will usually take several years to purchase a significant amount of stock with a DRIP. In fact, most DRIPs purchase fractions of stock.
Moreover, you should find a no-fee DRIP. To clarify, most dividends are so small; any fee will eat up most of your gains. Taxes are another potential problem with a DRIP because you could end up paying income tax on dividends you never receive.
Finally, a company’s management can end a dividend whenever it wants. Therefore, a DRIP is not a guaranteed source of additional stock.
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Direct Purchase Plans
A direct purchase plan enables you to buy stock directly from a company without paying a fee. Historically, some companies sold stock directly to members of the public for cash. In addition, many companies allow employees to buy stock with a portion of their salary. Generally, direct purchase plans deduct stock purchases from an employee’s pay. Thus, a direct purchase plan can limit your take-home pay.
If you work for a publicly-traded company, you can ask if there is a direct purchase plan available. Moreover, there are companies and services that allow individuals to purchase shares of stock directly.
Advantages and Disadvantages of Direct Purchase Plans for Stocks
Many direct purchase plans allow you to purchase a specific amount of stock each month. In addition, you can automate direct purchase plans by setting up a recurring withdrawal from your checking or savings accounts.
The advantage of such plans is that you can buy a stock over time with little or no hassle. The disadvantage is that it will lock you into purchasing a stock even if its price falls.
Another disadvantage is that you could limit your income. Finally, you cannot take advantage of opportunities in the market with direct purchase money. For instance, you could miss a great price on another stock you like.
Advantages & Disadvantages of Buying Stocks Without Brokers
The biggest advantage of buying stocks without a broker is that you will not pay a fee. Thus, they invest all the money you spend in the stock.
The greatest drawback of buying stocks without a brokerage account is that you could have difficulty selling the shares. In fact, most traders maintain a brokerage account because it allows them to sell shares quickly.
For instance, finding a buyer for the shares is difficult without access to exchanges. Significantly, a brokerage account will connect you directly to an exchange and tens of thousands of potential buyers.
Thus, it is not a good idea to buy stocks for speculation without a brokerage account. In addition, most modern trading strategies require the use of a brokerage account. For instance, you cannot perform short-selling unless you can sell stock instantly.
Buying Stock without a Broker Could Help You Make More Money
On the other, hand buying stocks without a brokerage account could help investors make more money—for instance, value investors who execute a long-term buy and hold strategy and persons saving for retirement.
Generally, the longer you plan to hold the stock, the more sense direct-purchase makes. In fact, buying stocks directly makes more sense for long-term investors.
To explain, they design drips to take advantage of a strategy known as compounding. Compounding means you use gains to buy more of an investment. For instance, compound interest means all interest goes back into the account to increase your money. Hence, the funds in the count and future interest gains will grow.
A DRIP can allow you to use dividends like compound interest. Instead of receiving cash, the dividends buy more stock. Thus, you can collect more dividends because you will own more stock. Therefore, a DRIP can help you save for retirement by accumulating a larger portfolio.
Disadvantages to Buying Stocks Without a Broker
The greatest disadvantage to direct stock purchase programs and DRIPS is that you could make less money with such strategies.
For instance, you will have a harder time taking advantage of opportunities like new stocks. Moreover, you could have a harder time getting rid of money-losing shares.
In particular, you cannot quickly dump shares that perform poorly. Thus, you can lose a lot of money if you invest in the wrong stocks.
Plus, you will miss out on the fun of trading stocks. If you enjoy the thrill of trading and buying new stocks, buying shares without a broker is a bad idea.
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Why Buying Stocks With and without a Brokerage Account could be a good idea.
Conversely, buying a few stocks without a brokerage account can help you keep some of your money safe. To explain, you could buy stocks for retirement savings directly while using a brokerage account for trading.
Thus, you could make money in the market in two ways. First, you could use
strategies like short-selling to profit from market movements. Second, you can use compounding to make money from dividends and long-term growth.
Hence, a good strategy is to use directly purchased or DRIP stocks for your retirement and a brokerage account for your trading. An advantage of this strategy is that you can have fun in the markets while keeping your nest egg safe.
An obvious disadvantage to this strategy is that gains from market movements will not grow your nest egg. However, you can increase your nest egg by periodically cashing out some shares in your brokerage account and buying more stock directly.
Thus, you can have the best of both worlds by buying stocks with and without a brokerage. Conversely, utilizing two strategies can double your market risks.
How Can I Sell Stocks Without a Broker?
Unfortunately, selling stock without a broker or a brokerage account can be difficult. Selling stocks without a broker is tough because most people buy stocks through brokerage accounts.
Generally, you cannot get access to exchange without a brokerage account. Thus, it is impossible to put stocks before would-be buyers without such an account.
Therefore, to sell stocks without a broker, you will need to locate the transfer agent of the company that issues the stock. To explain, the transfer agent has the legal power to sell the stock and access to an exchange or a brokerage account.
You can usually locate the transfer agent handling a stock by going to the investor relations section of a company’s website. In fact, there should be a direct link to the transfer agent on the company’s website.
How to Sell Stocks with a Transfer Agent?
On the positive side, a transfer agent will handle all the details of selling the stock. On the negative side, a transfer agent usually charges a higher fee than a brokerage. Hence, you will often make more money by selling shares through a brokerage account.
Additionally, it can take several days or longer for a transfer agent to sell a stock and send you the money. Therefore, you could have to use a brokerage account if you need to sell shares fast.
Fortunately, online brokerages like TD Ameritrade or Charles Schwab will let you set up accounts fast. On the other hand, you will need to meet all the requirements of online brokers.
Given these circumstances, it is not a good idea to buy stocks without a broker if you might need to cash shares out quickly. Additionally, you should always ask how to sell stocks when you buy shares directly.
How Can I Sell Stock Without a Broker Through a Direct Purchase Plan?
Conversely, it is easy to sell stocks through a direct purchase plan. Typically, you only need to notify the plan’s administrator you want to sell the stock to unload shares.
Moreover, many direct plans will have apps that enable you to sell at their websites. You must be cautious when using such apps because they can charge a fee or penalty for selling stock.
Furthermore, if you sell fractional shares of stock, you can receive a fraction of the equity’s value back. Thus, it is not a good strategy to invest money you could need soon in a direct purchase plan. Instead, you could save money by using a traditional brokerage account.
Selling Stock Directly without a Broker
It is possible to sell stocks directly to another person if you have the actual stock certificates in your possession.
Unfortunately, most of today’s stocks exist only as digital investments. In fact, it takes a special request to get a paper stock certificate sent to you. Getting such a stock certificate is a hassle because the issuing company will probably have to print it up for you, especially.
However, if you have a paper certificate, you can sign the stock over to another person like you would a car title. Note, you could need to get the signature witnessed or notarized for a stock sale to be official. In addition, you could have a difficult time locating a lawyer or broker that knows how to deal with paper stocks.
Can You Buy Apple Stock without a Broker?
You cannot buy Apple (NASDAQ: AAPL) stock without a broker or a brokerage account. Moreover, Apple does not offer a dividend reinvestment program (DRIP) or a direct purchase program.
However, it is possible to purchase Apple stock from almost every online brokerage. Thus, you will have no problem adding Apple to your portfolio.
Can You Purchase Ford Stock without a Broker?
On the other hand, you can purchase Ford (NYSE: F) stock without a broker or a brokerage account. To buy Ford shares directly, you need to contact Ford’s transfer agent Computershare directly. Usually, the best way to contact Computershare is through its website. However, you can telephone or email the Ford Team at Computershare directly.
How to Learn if you can Purchase a Company’s Stock Directly?
It is very easy to learn if a company offers direct purchases of its stock by going to the company’s website. Simply find the investor relations portion of the website and look for frequently asked questions or FAQs.
In most cases, one question will tell you if the company offers a direct stock purchase. Moreover, the FAQ will usually tell you how to buy stock directly; if the company offers a direct purchase option or a DRIP.
Furthermore, you can learn about direct purchase options by typing the company’s name and the world’s buy stock directly into a search engine. In fact, search engines like Google can take you straight to the direct purchase information on the company’s website.
Which Stocks Can I Buy Without A Broker?
Notably, many companies no longer offer a direct stock option. However, many corporations still offer direct purchase of their stock.
Generally, the easiest way to locate stocks with a direct purchase option is to go to the websites of transfer agent companies like Computershare. In fact, such companies usually list all the direct purchase stocks they have available on their websites.
US Stocks You Can Buy Without a Broker:
- The 3M Company
- Apache Corporation
- Apollo Commercial Real Estate Finance Inc.
- Bank of America Corp
- American Greetings Corp
- Callaway Golf Company
- CenturyLink Inc.
- ConAgra Brands, Inc.
- Chubb Limited
- Cracker Barrel Old Country Store
- Duke Energy
- Exxon-Mobil Corporation
- General Mills, Inc.
- Honeywell International
- Kellogg Company
- Manpower Group Inc.
- Morgan Stanley
- Norfolk Southern Corporation
- Raytheon Company
- The Bank of New York Mellon
- The Charles Schwab Company
- Union Pacific Corporation
- United States Steel Corporation
- Xerox Corporation
- Zions Bancorporation
Note: you will need to check directly with each company’s website to see if a direct purchase is available. In addition, transfer agents like Computershare post lists of direct purchase stocks on their websites.
Why do I need a Stock Broker or a Brokerage Account?
Under today’s conditions, it is easier, cheaper, and faster to buy and sell stocks through a brokerage account than to purchase directly. In fact, you will need a brokerage account if you plan to own more than a few shares in one company.
There are many good reasons you will need a brokerage account. First, there are many stocks like Facebook, Apple, Amazon, Netflix, Google (known as FAANG Stocks), that you cannot buy without a brokerage account. In fact, you can only purchase many of today’s most popular stocks with a broker.
Second, there are many discount brokers that charge very low fees for stock purchases. In addition, there are solutions like Robinhood that claim to offer no-fee stock transactions. Thus, it will not cost very much to buy and sell and stock.
Third, you can buy and sell stocks almost instantly with many of today’s brokerage accounts. Therefore, you can sell stocks for cash quickly in an emergency.
Hence, many retail investors can only afford to invest in stocks through brokerage accounts.
Finally, today’s brokerage accounts include many algorithms and automated tools that will do almost everything direct purchase plans can. For instance, there are many brokerage accounts that offer fractional stock purchases, automatic withdrawals from checking accounts, and dividend reinvestment options.
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Under these circumstances, most of the traditional advantages of direct stock purchases and selling shares yourself no longer exist. Therefore, the average investor has no need to buy stocks without a broker or a brokerage account.