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Friday, 07/09/2004

Which Broker Should I Use?
by Nich Sheldon

One of our faithful readers sent in a question this week that I believe all of you new to DRIP Investing may benefit from. With his permission I have listed his question and my response below.

Your website is fantastic! Thanks for all the info. One question though, since I have to buy one share of the corporation before I can start investing through Drips, which Brokerage Firm should I go through? Is there one that is inexpensive that your firm can recommend?

K.R., New York

Dear Mr. R.,

Thank you for your compliment, it means the world to me.

Since we are not affiliated with any certain brokerage firm, we do no like to recommend such firms to our subscribers.

One thing I will disclose is that there are a number of brokerage companies that offer cheap trading commissions. I would suggest that you do a search on the web, perhaps Yahoo or Google, for brokerage firms. In most cases their fees are listed on their website.

If you still have questions or concerns with their fees, I would recommend shooting them an email or even a phone call. There are two things that you should ask - one, what are their trading commission fees. And two, what do they charge to actually ship you the certificate. For instance, some firms may only charge you five dollars for trading commission fees, but then they charge you twenty five dollars to send you the certificate, tabulating out to thirty dollars in total cost, which means if the stock is forty dollars, it is going to cost you seventy dollars for the total transaction. While other firms, may charge you ten dollars for trading commissions and ten dollars to send you the stock certificate, which would ultimately mean that you have just saved ten dollars. I would pick three or four firms that you search for on the web and then weigh the costs. This may take twenty or thirty minutes to do, but it could save you ten or twenty dollars per transaction which is well worth the time invested.

Another option that you have is to purchase stock directly through the company (not all companies offer this). Thus getting rid of the middle man, or broker. This is called Direct Stock Purchase Plans (DSP). If you call this number, 1-800-774-4117, you can place your order over the phone or you can go to their website to place your order. There are roughly 350 said companies that offer DSPs, and they are all viewable at their website. Did I mention this is a free service?!?!

I hope this helps you and may your investments come back ten fold.

Please feel free to email me with any further questions that you may have.

Nich Sheldon

P.S. I am currently in the process of updating our Glossary Section. It has been a while since I visited this section on our website, and I realized that our Glossary was insufficient. I will let all of you know when this section is updated.

Also, send me any questions that you have, and I will answer them as soon as I can. If your question is common enough, I will post it on the website (with your permission) so that our readers can share in your education.

Weird Phrase for the Day.
A master can tell you what he expects of you. Whereas, a teacher awakens your own expectations. I read this saying in an email from a fellow friend/trader of mine and got a kick out of it. You see, in no way do I pretend to be a master of Drips. I know just as well as most of you do, trading/investing is a very difficult job to do. I figure together we can learn from each other, and teach one another what our triumphs and failures are. If you think that you know of a good catalyst for solid dividend returns, please email me with your thoughts. Who knows, maybe your investing techniques can help to benefit other readers.


Copyright 2003

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