A:
There are a few circumstances in which a mortal physically can buy stock directly from a company. The following is meant to cover some of these occurrences, which include direct stock purchase plans, dividend reinvestment representations (DRIPs) and employee stock purchase plans (ESPPs).
Direct Ancestry Purchase Plan
This is when a person buys stock anon from the issuing company. There are a number of well-known companies that purposefulness sell stock directly to individual investors. Most companies that presentation this kind of purchase option don’t charge investors a commission, and if they do, the commission or assistance charges is very low compared to buying stocks through a broker. If you’re buying a sheer small number of shares and want to minimize your costs, a require stock purchase is a great way to go.
Dividend Reinvestment Plans
Investors who own partitions in a company with a dividend reinvestment plan have the option of record with the company and participating in the plan. Instead of receiving dividends from the New Zealand, DRIP participants’ dividends go directly toward buying more staple in the company. As with direct stock purchases, there are often no commission costs associated with DRIPs. (For more on this, read The Perks of Dividend Reinvestment Diagrams and What is a DRIP?)
Here is how a DRIP works:
| Example Company A salaries a dividend of $0.50 per share on an annual basis, and its stock is worth $40 per share. A Drag participating investor owns 200 shares of Company A’s stock. Rather than of receiving a $100 check each year in dividends, the investor can buy 2.5 divide ups ($100/$40 per share) of stock. These shares are given directly from the coterie and no commission fees are charged. |
Employee Stock Purchase Plans
For wage-earners that work for public companies, ESPPs provide a great unplanned to buy the company’s stock at a discount. Employees are limited in the number of shares they can buy, and it’s not unendingly a good thing to increase your holdings in your employer’s suite – it’s a bit like putting all of your eggs into one basket. In general, ESPPs propose employees the chance to buy stock for 85% of the market value. These investments can go directly into a retirement fund, so there’s usually an opportunity to participate in ESPPs with untaxed proceeds; in these cases, money is deducted from an employee’s salary.