Jimellow

If I were interested in buying shares of a company's stock, how would I go about doing it?

Do I have to sign up with an online broker (E-Trade, Fidelity, etc.) and go through them? Are there other means?

If signing on with a broker is required, which is recommended? I would only be signing up with the intent of buying some stock, and not investing in their mutual funds, etc, and thus would be most interested in why a particular broker is better in regards to stock trading and selling.

I am not looking to get heavily into stocks, or doing day trading, or even multiple transactions, but instead buying shares of a company and potentially adding more as I get some more play money.

What is the best way to go about doing this?

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NoSoup

Personally, I used TD Waterhouse - their fees are a bit higher, but they also give you access to a ton of information. Since I do my own research, it's worth it to me.

However, if you already have a company or two in mind that you'd like to purchase, I believe Scottrade was the cheapest (at least it was when I was looking around for an online discount broker)

However, you may want to look into seeing if the company offers DRIP (direct reinvestment plans) and forego paying broker fees altogether. Basically, if they do, you can set up an account with the company and they can take $X from you, or you can set up a reoccuring investment of $X on weekly, bi-weekly, or monthly basis.

Hope this helps - good luck!

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Just in case you were wondering...

soma

For your specific needs (constantly buying into a single company) sharebuilder.com would probably be your best bet. But as NoSoup said, Scottrade also works very well. I know from personal experience that it is very easy to use and they have decent customer service people to help you get started. If I remember correctly, Scottrade has a 500$ minimum. I'm not sure about sharebuilder.com, or if they even have a minimum account balance.

After opening a brokerage account, you can basically just get started and buy shares in whatever company you please.

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ozahs

Regarding DRIPs as mentioned by No Soup, most public companies have "Shareholder Services" departments that can get you started. DRIPs are an economical way of investing, and it sounds like a good match based on your description of your situation.

Only consider getting a broker if you want advice on what to buy. You pay a lot more when you go through a broker because of the advice they offer. And you will get advice, whether you want it or not.

If you think you will be doing quite a bit of investment in the future, then DRIP accounts might not be the best answer. You will outgrow them pretty quickly, and an investment account will suit your needs better.

Check with your bank to see if they have a brokerage department. I work for a large super-regional bank, and we have a strong online banking department. As an investment customer, I have the choice of using a broker or using a self-directed approach (discounted brokerage). I have the self directed account, and trades are about $20 per transaction. By using my bank for my investing, I can go to just one website to link to all my accounts. The site links me to my checking, savings, car loan, mortgage, IRA, and investment accounts. I like the convenience of having everything linked, but I am sure others would tell you not to put all your eggs in one basket, so to speak.

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Baraka_Guru

It sounds like you're interested in buying stocks as a hobby and that this is a new experience for you. The industry calls what you do "do-it yourself investing." There are many web sites devoted to do-it-yourself investors. They should have information referring to discount brokers. You might want to look into this because you shouldn't pay certain commissions (which are often hidden) to a broker who is simply doing transactions and offering no advice.

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Knowing that death is certain and that the time of death is uncertain, what's the most important thing?
—Bhikkhuni Pema Chödrön

Humankind cannot bear very much reality.
—From "Burnt Norton," Four Quartets (1936), T. S. Eliot

Supple Cow

I just started using Sharebuilder in January because I have this irrational need to own at least one Google stock. Once I signed up, I got carried away and decided I wanted to hold a piece of Disney and Netflix, too, but my investment strategy was stupid. If you choose the free account (which I, a poor youngster, did) you just sign up for a monthly automatic investment and you don't pay any annual fees. They just take a $4 fee out of what you are having automatically taken out of your bank account, so for example, they would invest $96 for each automatic deposit of $100. What I figured out after two months was that they take that $4 out for EACH STOCK, so I was stupidly having $12 of my measly $50 a month go into fees just so that I could own GOOG, NFLX and DIS. Lesson learned.

Now I'm sticking with one stock at a time. I only own about three-tenths of one Google stock at this point, but this is enough to keep me on my quixotic path to owning a WHOLE one some day. Then I'll probably switch my automatic investment plan over to NFLX to support my other habit.

I'm not sure if this was actually helpful or relevant to the OP, but since soma mentioned it, I thought I'd chime in with my personal experience.

Dilbert1234567

i use Ameritrade, or now TD Ameritrade, it's $10 a trade, no more, no less, and no monthly fee's. Good choice on Disney I own just a smidgen under 40 shares, it's been great to me over the past decade and a half.

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yellowmac

I recommend Scottrade (scottrade.com). They charge a flat $7/trade. I just started investing a few months ago, and I picked up their service from a friend's tip. So far, no complaints -- only wish I could have started investing *after* that stock market mini-correction in February, lol.

Anyway, if you're interested, please feel free to PM me as we can both get free trades if I refer-a-friend.

eribrav

Supple do you have the discipline to be able to save money in a savings account or money market for a bit? Because you'd be much better off saving up the $450 or so to buy a GOOG share, then opening a discount brokerage account and paying one $10 fee once to get your share. On a percentage basis you're getting creamed by fees right now.

Dilbert1234567

when i was day trading to survive, i got creamed by fees once, i forgot to check the 'all or nothing button' when selling 4 million shares, instead of one block of 4 million, it sold as they were available, in smaller blocks, each block i had to pay $10 on, i think the total charge was $800... i still came out in the black on that trade but i could have had $790 more if i had done it at the same time.

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Donate Blood!

"Love is not finding the perfect person, but learning to see an imperfect person perfectly." -Sam Keen

Supple Cow

Huh.

*slaps forehead*

I guess I hadn't thought of it that way. I do have the discipline to save that kind of money, but I think my initial instinct was to have some of the stock now. Here I'm thinking along the lines of ING's automatic investment plan for my IRA, to take advantage of dollar-cost averaging. Of course, ING just takes out $10 annually and I am paying $4 a pop monthly to own a mouse's share of Google. I suppose this is where that irrational obsession thing comes into play.

Now that you've put it to me that way, I looked into my options at Sharebuilder and discovered that I can turn my automatic investment plan off and just hang onto what I already have until I am ready to put more in. Plus, I just got my federal tax return, so I think I'll just set my automatic plan to "one-time" and invest a $300 chunk. The "one-time" option automatically shuts the plan off after that one investment, and I can turn it back on at any time.

Baraka_Guru

I thought I'd throw this out there.

Analyst Dan Reingold (author of Confessions of a Wall Street Analyst) says trying to be an outsider stock investor is like “being a drug-free athlete whose competitors are all juiced up on steroids.” This is what he concludes on the issue of buying stocks:

Individuals should not be buying individual stocks. I know this is a radical statement, especially coming from a guy who researched individual stocks for a living. But there are simply too many insiders with too many unfair advantages.
-Confessions of a Wall Street Analyst, p 313.

I've read many other things that would convince me to invest in other ways rather than directly in stocks. I've read many contrarian points of view by authors who have very successful professional careers making sure people don't lose their money... ever. It's called "knowing you will retire comfortably."

__________________
Knowing that death is certain and that the time of death is uncertain, what's the most important thing?
—Bhikkhuni Pema Chödrön

Humankind cannot bear very much reality.
—From "Burnt Norton," Four Quartets (1936), T. S. Eliot

Jimellow

Interesting, thanks.

I generally don't like stocks. They fluctuate too much and I don't understand the mechanics of how and why they rise and fall well enough to invest heavily in them.

I am not of the right mindset to really invest heavily in individual stocks. I do thoroughly enjoy reading about business, the economy, and related topics, but investing heavily, and primarily, in stocks seems risky to me.

I've played fantasy stock market games in the past, and am actually a part of one now; where I am doing quite terribly. I am very impatient and it seems to me that investing heavily in, and following stocks, would lead to quite a bit of stress and concern. I definitely feel my money is better served elsewhere, but I could foresee putting a reasonable amount of money aside to "play" with, but that's about it.

Thanks for the great replies and information. I'm of the mindset that investing is almost always a good idea, but I've also concluded that individual stocks aren't the means by which I will find financial contentment in life.

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pocon1

nothing to say

Willravel

I also use Ameritrade. I've never had any problems with them. Right now you can get 45 days of free trades, which is a good deal.