Do I Need a Broker to Invest for Me?

For 99% of stock trades, a stock broker is needed to buy or sell stock on the open exchanges. The New York Stock Exchange and NASDAQ marketplace may be open to traders all around the world, but without a seat on the NY stock exchange, it's nearly impossible readily buy and sell shares of stock. There are some direct investment plans that are offered from a number of large corporations that will allow you to buy and sell large volumes of stock per year with zero commissions, but this form of investing is best left for long term investments, rather than short-term or day trading.

Stock Brokers Give You Access

You need a stock broker for access to the market, but you don't need one to invest your money for you. The decision making of investing is left to the investor; whether or not they want to hire a professional stock broker for advice and money management is entirely up to the end user. If you want the personalized help of someone who is familiar with the market, a stock broker isn't that expensive for people who make long term investments.  However, if you're buying and selling on a whim, the commissions of a stock broker will likely exceed what you're willing to spend unless you are trading large sums in the tens of thousands of dollars.

Save the Personalized Touch and Save Money

Discount brokers are a great way to get in on the market for the cheapest price possible. Many companies, such as Sharebuilder, only charge a few dollars per trade, but lack the fast pace trading possibilities of other stock brokers and discount broker facilities.  Look for an online discount brokerage that offers instant execution, such as OptionsXpress.

Direct Buys

If you're interested in building long term investments in blue chip companies, which are those with huge market caps, direct investing is great. With many of these plans, you'll be able to buy up to $100,000 of stock directly from the corporation at market price without any commissions. Huge corporations are happy to run these programs to give back to their investors and help long term investors build positions over time without the added fees of stock brokers.

Dividend Reinvestment

Direct buy programs often have a dividend reinvestment option, where instead of receiving dividend checks paid quarterly, semi annually or annually, the amount of the dividend will be used to by shares of stock. Dividend reinvestment plans, as they are known, also allow the purchase of partial shares, which is something that most stock brokers will never allow you to do. Being able to purchase partial shares means that you'll get better compounding of the profits received from dividends and be able to buy half, or even tenths of shares without paying a commission.

Finding good companies with a direct buy problem is not hard. If it's a large business with a billion dollar market cap, chances are that direct buy purchases are offered directly from the company. For the long term, there is no better alternative than buying direct from the corporation at market prices and zero commissions.