The Best Way to Start
Dec 24 '00
I started investing in DRPS programs about 3 years ago. I stumbled across them on the internet and began researching this option as a way to get into the stock market and I have been very pleased since.
With DRPS, you purchase your shares of stock for companies directly from the company, typically through their registered bank. With each company, there are different requirements that have to meet when purchasing the stock. This is a huge help to those of us who don't want to purchase large amount of stock or who don't have large amounts of money to invest in the stock market. A small amount of money is all it takes to begin purchasing stock through DRPS.
For example, I purchased Home Depot stock. Their minimum requirement was that you purchase $250.00 with your initial deposit. No further requirements were needed. In making that initial deposit, they take out $10.00 for your account setup and activation and the rest of the money is used to purchase shares of stock in your name. Each month, you receive a shareholder statement with an attachment that allows you to invest more money if you want to. The minimum monthly investment has to be $25.00, which is easy to make if you want to. You are not required to consistently make deposits, it's all up to you.
Another stock I purchased this way was Wal-Mart. Their minimum requirement was one of two options. You could make your initial deposit of $300.00 or sign up to have $30.00 per month withdrawn from your checking account for 10 months. After 10 months, you can cancel your autodraft and send money as you wish. I chose to sign up for 10 months of withdrawals and I didn't notice the money missing and it was used to purchase stock each month. They charge a $1.00 service charge each month when purchasing your stock.
The only drawback I have with DRPS plans is for the majority of them, you have to send in a request to sell your stock and they will sell it on the following sell day at market price. This hurts if the stock drops before your request is received or processed. Most DRPS companies buy stock on a weekly basis on Thursdays so you have a week interim period where volitility in the market could help or hurt you. In selling the stock, most companies charge a small fee (25 cents per share for instance) for selling your stock. It's not a huge amount and doesn't really cut into your profits.
At any time, you can request that your certificates are sent to you for your own keeping or for deposit elsewhere. To overcome the time delay in DRPS plans, I recently requested my certificates for Home Depot and Wal-Mart. Once I got those, I deposited those into my E*Trade account so that I could sell them at my leisure without time delays. All shares were sent to me and any fractional shares were sold at that day's market value. The downfall to depositing them into another account is that you have to pay a fee to sell the stock (E*Trade charges 8 bucks) but considering your safety in knowing its sold the day you want it sold, it's a help.
Currently, there are over 600 companies offering DRPS programs, all with different initial requirements. To learn more, you can visit the companies site, which often has information on it, or visit different internet sites that contain all of the companies, who to contact and the initial requirements of each company. I used the internet sites to learn about the companies that offered these plans and most information contained links to get information and sign-up materials for the different plans.
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Epinions.com ID:
mrmazda
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Member: Todd
Location: Conway, AR
Reviews written: 379
Trusted by: 126 members
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