There are companies that allow an investor to purchase stocks directly from the company.  This is perfectly okay according to the Securities and Exchange Commission.  These are called Direct Stock Plans. It is called a DSPP. The company may require that you already have stocks through employment with the company. It is not required in all companies.

The Direct Stock Plan operates differently than buying stock through a broker. There is no commission charged for these stock plans, but there can be a small fee. The other difference is that the company buys and sells the stock at a given time. The investor cannot sell or trade stocks at will. The investor may turn the stocks over to a broker to sell, but the broker cannot charge a commission. You may be charged a fee by the company.  It depends on your agreement.

If you have a favorite company, like the Walt Disney Company, Coca Cola or other brand names in the United State you may be able to implement a Direct Stock Plan to purchase stocks on a regular basis.  You can review the list of stocks in your local library or check out the company you are interested in by accessing the company web site.

Another method of investing direct in a company is by way of the Direct Dividend Reinvestment Plan. It is commonly called a DRIP. The good aspect of this type of plan is that instead of receiving the dividends you agree to reinvest the dividends in more stock in the company.  It is a regular Direct Stock Plan with a reinvestment agreement.  You may do the same reinvestment plan with your other stocks and mutual funds even if you have a broker.

The advantage is that if the company allows a private investor to purchase stocks directly this would allow you to set up a pay check withdrawal each pay period for the purposes of the stock plan.  There are various advisory services that can assist you in locating companies that offer these direct stock purchase plan.  I would suggest that you find companies you are interested in a make an inquiry with investor relations.

The advantage to contacting the individual company yourself is that it allows you to use your preferences and then do a small amount of leg work.  The company representative will give you the necessary forms and provide you with individual advice on how to set up pay roll deduction.  In turn you can contact your banking institution, employer human resources or bill payer and set up the account.

It will astound you the number of very good companies that will allow you to buy stocks direct by setting up a plan.  The range of possibilities include, utility companies, fast food stocks, entertainment and retail stocks.

If you have a solid company that has shown solid performance this may be a good option for investing. The only thing you have to lose is your time. The time it takes in gathering the information has a big payoff. It will save you commission fees and provide you with a long term relationship with your favorite company.

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The threshold question before you decide to invest in the stock market is whether you are an investor.  For some people the stock market may not be suited to their personality.  This article addresses some of the qualities an investor should have in order to make a reasonable return in the stock market.

Sure, there are folk tales you may hear about the guy who bought XYZ Company  stock for $5 and sold it 60 days later for $50 a share.  This scenario probably has happened , but it is not the reality of being an investor. The following points should be considered when you are considering becoming an investor.

Are you self-disciplined in your thinking?

The first step anyone must take into account is their own personality.  Are you objectively a person who is organized in your thinking?  Do you know how much money you have to invest?  Do you know how to set objectives in your finances?  Have you set goals for savings and followed through on those objectives?  An investor has to have a clear set of objectives in their choice of investments.  Is the amount of money you intend to invest a one time wind fall?  Are you able to set aside a certain amount of money each month to investing that is disposable income?

In effect what you will be doing is moving some of your pass book savings to an investment.  Patterns development in peoples lives.   Are you able to transfer your savings pattern to include a regular investment in the stock market? If you are currently earning a small percentage on your pass book savings account what rate of return would you be satisfied in receiving?  The key to investing is to know your expenses and income and decide how much money is disposable income. It is this excess that will be your investment dollars.

Are you able to set goals and listen to good advise?

Once you have determined that investing may be a possible avenue for you to consider the next step is setting goals.  A goal is the objective of your investment. It could be for retirement, a vacation home, a rainy day fund or a new boat.  Whatever your is determines the type of investing you will be looking for in your research.  If it is a long term goal like retirement you may seek a tax exempt municipal bond fund or a mutual fund with certain characteristics. If you want liquidity like a pass book savings account where you can draw money as you need it there are some investments that may fit. The important aspect of this step is to know your objectives and then draw up a budget or a plan.

All of the major fund companies have managers and consultants. Are you able to set forth your objectives and ask for advice in picking out a fund that will fit your needs?  This does not mean you need to sign up for the first consultant who takes your call. It means can you listen to advice and make a decision on various alternatives offered to you. After you have gathered all the information you believe is necessary for your decision can you apply your personal goals with the information presented and make a final decision?

This may seem like an odd inquiry, can you make a final decision?  Unfortunately, some people will feel quite comfortable going to a car show room and purchase a $30,000 automobile. The color, impression, and internal motivators. But when it comes to investing, the buy is not as dazzling.  It takes consideration to commit $30,000 to an investment in paper form even though you may be purchasing stock in the flashy car company.

Can You Let Go?

The final and perhaps most important aspect of deciding if you are a stock investor is, YOU.  After you have gone through all of the self analysis, goals, research and advice of others and made your final decision the next step is critical. Do you have the personality to allow your investment to take its course?  Can you sleep at night? Unless you are a day trader who plays the upside and downside of the stock market and I would not recommend this to anyone starting out. You have to be able to roll with the punches.  Trust your instincts and review your investment on a monthly or quarterly basis. If you buy individual stocks, place a limit order on the account. A limit order allows your broker or on-line account to sell if the price goes down.

The mutual fund investment works differently that buying individual stocks. If you are satisfied that your choice of a fund met all of your criteria for investing let it alone and review it only periodically.  If your mutual fund for any reason meets with unexpected long term problems you can change funds.  I would review the fund on a quarterly basis and discuss this with the fund account manager or representative.

This is the investor personality that you need to have in order to have a lifetime of success in the stock market. If you have it, it works. If you don’t, try another type of investment.

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