How to Invest on a Budget

Want to invest in your favourite company without a broker? Well, more and more companies are offering a way to purchase stock directly from them called no load stocks, according to Marie Evans who owns www.qropshelpcentre.co.uk.

No-load stocks allow you to buy shares of stock directly from the company or mutual fund family, via mail, without using a broker or paying commissions. You may purchase your first share and every other share, directly through the firm.

Process

Call for information. Investors must first contact the company to obtain an application form and a plan prospectus. The plan prospectus describes in great detail all of the aspects of the no-load stock program-what the minimum is for the initial investment, when the funds will be invested, how investors may sell shares through the company, and any other features the plan offers.

Fill out the applications form. Once you’ve received the material in the mail, read the prospectus and fill out the application form.

Cut a check. To make your initial investment, make out a check to the company or its transfer agent. Instructions will be given on the application form. Make sure that your initial investment falls within the parameters for the minimum and maximum investment.

Mail it to the company. Put your check and application form in an envelope and return it to the company. In some cases, the company will include a return envelope in the application material.

Pros of No-Load Investing

Low Investment Minimums-Many companies offer minimum investments way below the minimums of many other programs.

Regular Statement/Record-Keeping Assistance-Companies send a statement to investors after every investment. The statement shows the number of shares purchased, the purchase price, the total number of shares held in the account, and in some cases, the total value of the shares. Companies also provide a year-end statement to assist you at tax time.

Direct Ownership-When you buy shares directly from a no-load mutual fund, you are the registered owner of the fund shares. That’s not always the case when investors buy stock. Most investors are not the registered shareholders of the companies in which they invest. Most likely, your company has no record of you as a shareholder, but is held in “street” name.

Safekeeping Services-When you purchase shares in a mutual fund, you are not sent share certificates. Your holdings are recorded in book-entry form. This is true for no-load stock programs also, however, if a shareholder wants to take possession of the stock certificate all he or she has to do is contact the company or its transfer agent and a certificate will be created and sent to the investor.

Fractional Shares-When you invest in a no-load mutual funds, all of your money is invested, regardless of the net asset value of the fund. However, when you buy individual stocks you have to invest amounts that buy whole shares.

Dividend Reinvestment-Gives investors the option of having their dividends reinvested, and most of the firms charge no fees for providing this service.

IRA Investing- Most no-load mutual funds permit investors to place their mutal-fund investments in an individual retirement account and the funds acts as the custodian for the account. Because of this feature, mutual funds offer one of the easiest ways to save for retirement. It is not as simple in many cases with individual stocks, without incurring large commission fees.

Automatic Investment Programs-These services allow a mutual fund to withdraw electronically a predetermined amount of money each month from an investor’s savings or checking account to make regular investments in the mutual fund. Investors like such programs because they simplify the investment process, save time, reduce postage costs, and ensure that investors will invest regularly in their funds.

Cons of No-Load Investing

Frequent Purchases-Mutual funds will accept money from investors anytime. So will brokers, but they’ll take their cut each time. One drawback of no-load stocks is that the opportunities to purchase stock each month are limited. Most no-load stocks invest money only once a month. However, that situation is changing. No-load stocks are realizing that investors want the flexibility to make more frequent purchases, especially if a stock drops in price. Thus, several no-load stock programs have instituted more frequent purchases.

Frequent Sells-Selliing a mutual fund is easy, it requires just a phone call in many instances. In most cases, no fees are charged for selling mutual-fund shares. Selling stock through a no-load stock program isn’t as easy. In most cases, the companies require a sell notice in writing, and it may take 5 to 10 business days to sell the shares and additional time to remit the funds to the investor. In addition, most no-load stocks charge fees to sell shares for investors, although these fees are still smaller than those of traditional brokerage commissions. Fortunately, the situation is improving.

Now that you know anyone can invest on any budget. No more excuses! Get out and take advantage of this buyers’ market and treat yourself to some no-load investments. Have fun!