Stockbrokers can be extremely beneficial, especially to someone new to trading. Once you’re familiar with the market, you can easily trade without a broker and the costs associated with them. Keep reading to learn more about how you can earn more money through trading, how to make trades without a broker, and some of the fees associated with broker-free investing.
How Can I Earn the Most Money Through the Stock Market?
Any seasoned trader knows that you can earn a high profit if you invest wisely, and an important part of that is cutting down on expenses any way you can. A great way to eliminate extra costs is by getting rid of your broker and handling your investments on your own. By doing this, you can get out of paying the broker’s costly commission, lowering the fees related to each trade and increasing your profits.
How Do I Make Trades?
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If you’ve been trading for a while, realizing a broker is not required can be liberating and a little bit daunting. To get started trading on your own, you have a few options:
- Direct Stock Purchase Plan: A DSPP allows you to enjoy much lower fees by purchasing shares directly from companies that offer this service. Most companies use a transfer agent called Computershare, which is how you would find potential investments. If you invest in this plan, you find a promising company that uses the service, pay a minimal transaction fee, and then make your investment.
- Dividend Reinvestment Plan: Another option is a dividend reinvestment plan, also known as a DRIP. With a DRIP plan, you have to already own stock in a company before you can register as a DRIP participant. Through this plan, you can purchase a company’s stocks even if they don’t normally sell shares directly to the public, giving you access to a wider range of investment opportunities.
- Discount Broker: Using an online broker is both more convenient and less costly. These trading sites and apps usually provide users with analytics and educational resources.
Are There Hidden Expenses to Trading Without a Stockbroker?
Regardless of how you go about buying stocks broker-free, the transaction costs are almost always considerably lower than if you went through a full-service broker, which usually costs around $150 per transaction. Here’s a closer look at the financial side of each plan:
- DSPP: With a DSPP, transaction fees can be as low as $10, and you can make investments of as little as $25. If you agree to set up a recurring investment, the minimum investment can drop to $10.
- DRIP: When you invest using a DRIP, you usually have no transaction fees, you get to enjoy discounted prices for shares, and the requirement for a minimum reinvestment is $10.
- Online broker: Discount brokers usually have minimal or nonexistent fees, but you do have to pay a commission. Some of these brokerage platforms offer lower commissions for those who trade more frequently.
No matter which method you choose, make sure that you consider your goals and do your research first. Trading without a broker comes with a lot of benefits, but it does cost more of your attention and time.