Buying Stocks Direct On The Net

Over the past year or so several companies on the net have started offering the individual investor an avenue for directly investing in an increasing number of companies. This allows investors to buy small amounts of stock without having to pay large commissions to brokers. This is an excellent way to get your foot in the door in the investing world. What follows are profiles on most of the major players in this field.

• BuyandHold.com www.buyandhold.com - Of all the firms that we checked into, this is or favorite. BuyandHold offers more than 1,400 stocks through their service and only requires a mere $20 minimum to open an account. They allow customers to buy and sell stocks twice daily for only $2.99 per transaction. They offer automatic weekly, monthly and quarterly investment plans making dollar cost averaging a breeze. Combine that with good customer service response and no inactivity fees and you will be hard pressed to find a better plan.
  
  

• ShareBuilder (NetStockDirect) www.sharebuilder.com - ShareBuilder offers substantially more stocks than BuyandHold (2000), however, other areas of their program don't seem to compare as well. Although there is no minimum amount needed to open an account, you are charged $11.95 if you have fewer than four transactions in a year. Currently, ShareBuilder makes their purchases on a weekly basis for a fee of only $2, if the purchases are made on their available weekly/monthly auto-investment plan. One time purchase fees are $5. They do make their stock sales on a real-time basis, but the fee per sale is a whopping $19.95. Finally, I had several problems getting their customer service department to answer the most basic of questions. Hopefully this is just growing pains on their part.
  
  

• StockPower www.stockpower.com - StockPower is perceived as a competitor to the previously profiled sites but in fact it is not. Whereas ShareBuilder and BuyandHold are basically brokerages that make money through transaction fees, StockPower generates their revenues from corporate clients by providing a way for investors to access their direct purchase plans. Their customer service responsiveness was nothing short of excellent. While the site is easy to navigate and well put together, there are relatively few companies from which to choose from. If they can bring on board a substantial number of new corporate clients they very well may become a force to be reckoned with.
  
  

• DirectInvesting www.directinvesting.com - DirectInvesting is basically the online version of The Moneypaper, which is a service designed to allow an investor to purchase their first share of stock in any of more than 1,300 stocks that offer direct purchase plans. Once you purchase the share(s) of your choice, they aid you in enrolling in the company's direct purchase program. An annual membership in the program runs $49 and the fee for purchasing the first share is $15 per company; however, if you do your homework and know what companies you want to enroll in you can take advantage of their 24-hour membership for just $10. Customer service response time was adequate.
  
  

• FolioFN www.foliofn.com - FolioFN is a relative newcomer to the scene and they do not appear to be well suited for the beginning investor. For an annual fee of $295 you receive unlimited trades in their pre-determined portfolios. If you follow our advice of limiting your trading costs to 2% annually, you would need to start out with a $15,000 portfolio to meet that goal.
  
  

Most all of these companies offer some type of program to help get you started in direct investing with nominal fees. Do your homework and find the program that is best suited for your particular situation. You will be amazed at how quickly you can accumulate stock with just a few dollars a month in a simple automatic investment plan.