Direct Stock Purchase Plans (DSPP’s for short) allow investors to buy stock directly from a company or their transfer agent without incurring fees – sometimes at discounted rates!
Set up a dividend reinvestment plan (DRIP) for automatic purchase and reinvestment through a dividend share purchase plan (DSPP). Note that DRIP plans allow existing shareholders to reinvested dividends.
If your shares provide dividends, DSPP’s may offer DRIP options.
How to Join a Direct Stock Purchase Plan and Dividend Reinvestment Plan, (DSPP & DRIP), the steps involved with investing through these programs were/are very straightforward:
Find the stock you wish to invest in and enroll in their plan (information can usually be found under “investor relations” on their website, if they offer one). Finally, set your DRIP account so it will automatically purchase or reinvest dividends into more shares (if this company offers dividends).
Sounds fantastic?
Yes it was before the internet came along with discount brokers born from it. In its early days of online stock investing you had to pay significant trading or management fees to full service brokers before finding Direct Stock Purchase Plans (DSPP’s, which weren’t easy without tubes) which allowed investors to sidestep these middlemen brokers completely and purchase stocks directly – unlike mutual funds which had ridiculous expense ratios! So in many ways DSPP’s were quite an attractive proposition.
In some situations, DSPP’s can still be great solutions; their concept remains appealing but their practical applications have diminished over time; even if no paper certificates need to be managed.
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