Investing in the stock market can build long-term wealth, but the costs of trading can be significant. The impact of brokerage fees can be even greater when you are just getting started. Since you have less money to invest, those brokerage fees take a larger percentage of your money and make it harder to grow your nest egg. Fortunately, you have a number of ways to buy stocks without paying a penny in brokerage fees.
Contact the Human Resources department at your employer and ask if the first sponsored an employee stock purchase plan. Employee stoc- purchase plans allow workers to invest in company stock through payroll deduction, much the same as with a 401(k). The money from those payroll deductions accumulates and is then used to purchase shares at specific periods throughout the year. Not only will you not pay a brokerage fee when you buy the stock, but you can also enjoy a discount off the purchase price of the shares.
Call or email the investor relations company of the companies whose stocks you want to buy. Many companies have established dividend reinvestment programs, also known as DRIPs. These plans allow investors to buy stock directly from the issuing company, without paying a brokerage fee. The dividends and earnings are then reinvested in buying more shares, again without the intervention of a stock broker. You can find a link for investor relations on the website of the company you're interested in.
Complete the application for the DRIP plan or employee stock purchase program and submit it to your employer, or to the investor relations department at the company you wish to invest in. Determine what percentage of your salary you want to invest in the stock purchase plan--most plans allow you to invest as little as one percent or as much as 10 percent of your salary. If you prefer to use a DRIP plan you can set the amount you want to invest on a regular basis. Investing regularly allows you to build up more shares over time.
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