ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Three Different Services You Can Use to Invest in Stocks

Updated on February 11, 2012
The New York Stock Exchange
The New York Stock Exchange | Source

From Affordable to Expensive, There are Many Stock Purchase Options

For the past 10 years, I have slowly been building my stock portfolio using online trading platforms like E-Trade, Ameritrade and Sharebuilder. Currently, I use E-Trade because it offers me nearly instant trades, stock information and company reports, useful applications, and occasional incentives like $500 or 30 free trades. Prior to E-Trade, I kept a stock portfolio with Ameritrade but eventually cancelled it because I could not trade on international markets. I also once maintained a stock portfolio with ShareBuilder, which was decidedly a more economical platform for me back when I had fewer dollars to invest.

If you've never used a stock trading platform, you may be wondering about the differences between all the sites I just mentioned. Likewise, you may wish to know what fees a site like E-Trade charges in comparison to Sharebuilder (or Scottrade, TradeKing, etc.) or Morgan Stanley. Finally, if you have only a few dollars to invest, you may be looking for a more affordable method of purchasing company stock. Regardless of whether you have two dollars or two million dollars to invest, the information below describes the three most common ways in which you can invest your money in the stock market.

1. Direct stock purchase

The least expensive method by which you can invest in company stock shares is to purchase them directly through the company in question. Direct stock purchase plans allow you to purchase shares directly from a company by working with its stock transfer agent (i.e., Computershare). The costs of such direct stock purchases are almost negligible; a $200 stock investment made through Computershare might cost as little as $1. Also, any dividends that are earned during your investment period are usually reinvested for free.

Companies that offer direct stock purchases usually advertise this fact in the investors' section of their website. Sometimes, the availability of direct stock purchase is not openly disclosed, so a phone call or e-mail to the company in question may be required. Keep in mind that if you do decide to invest with a company directly, your stock purchase order may not go through for several days or even weeks. As a result, you will not be able to time your order and will need to take more of a "buy-and-hold" approach to stock investment.

2. Discount brokers

If you are not a patient investor and prefer to buy and sell stocks on a moment's notice, then a mid-level trading platform such as E-Trade or Ameritrade may be better for you. These sites charge roughly $10/trade; however, they offer many features and benefits that are absent in direct stock purchase plans. For example, both E-Trade and Ameritrade offer 5-second trade executions, IPO notices, company earnings reports, and company event notices. They also offer other investment vehicles such as exchange traded funds (ETFs), IRAs, and options.

What if you don't need nearly instantaneous trades but would like access to company information and reports, as well as stock and financial advice? "Bare-bones" trading platforms such as ShareBuilder or OptionsHouse offer trades at or just below $4. There is usually no required account minimum (unless you wish to trade on margin) and you can even set up your IRA on these sites. The disadvantage with such platforms is that, just like with direct stock purchasing, you cannot buy a stock and sell it in the space of a few minutes. "Bare bones" trades are typically timed to execute on a weekly schedule. However, if you are investing for the long-term, this limitation will not worry you.

Discount brokerage houses like Scottrade offer many useful stock research tools.
Discount brokerage houses like Scottrade offer many useful stock research tools. | Source

3. Full service brokers

What if you have a great deal of money to invest and don't wish to deal with platform-mediated trades at all? If this is the case, then a full-service brokerage firm like Edward Jones or Morgan Stanley will be your best choice. Such brokerages not only offer quick trades, but they'll even perform the trades for you. Likewise, full-service platforms will personally advise you about which stocks you should watch, which stocks are a good buy (or sell), and what companies are rising or in trouble. This hand-holding is not without its price, however; a "typical" trade executed via Morgan Stanley can easily cost $100+ in fees. However, if you have a lot of money but not a lot of time (or patience) to invest it, a full-service broker platform may be your best choice.

Summary

You have several different options when it comes to investing in stocks. For the cost-conscious, there are direct stock purchase plans. For those who want fast trades and useful information, there are the mid-range discount broker platforms such as E-Trade and Ameritrade. Finally, if you wish to go all out and receive some one-on-one attention, a full-service brokerage like Edward Jones is your best bet.

For more information about making stock market investments, please read How to Survive a Stock Market Downturn

Which service do you use to purchase stocks?

See results

Comments

    0 of 8192 characters used
    Post Comment

    No comments yet.

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://hubpages.com/privacy-policy#gdpr

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)