Fees associated with using brokerage firms can be avoided by buying commission-free stocks online. New investors would be especially wise to avoid commission costs as they begin building their investment portfolio. With some options offering the purchase of stock at the low price of $10, no-fee online stock brokerages are a very good place to start investing.

Here are three cost-aware alternatives for no-fee online stock investing:

ROBIN HOOD

Robin Hood is a zero-commission online stock brokerage. Even phone trades are free with this start-up company.

Robin Hood makes its profit by collecting interest on idle cash, and through margin trading, in which the investor is lent trading funds while paying interest to the broker.

Although it doesn’t offer the depth of research like the bigger players, such as E*Trade and TD Ameritrade, outside financial news resources are easily accessible to help close this information gap.

Currently Robin Hood is only available through mobile apps.

INDEX FUNDS AND MUTUAL FUNDS

Other places to buy stocks commision-free are brokerages and large mutual fund companies. Fidelity, TD Ameritrade, and Vanguard are examples of companies allowing the purchase of selected funds and exchange-traded funds (ETFs) for free.

A cheap way to invest in a large group of stocks is to purchase index funds, as the broker managing an index fund typically waives the fee. This type of investing was initialized by Vanguard in the 1970s.

The reason why the fee is waived is because they’re low-maintenance. Index funds track an established bunch of stocks, making them very easy to manage while charging an annual fee of 0.20% or lower. Although that does constitute some cost—and this article is about no-fee investing—it’s still worth mentioning because the profits yielded by investing in index funds heavily outweigh this fractional expense.

Overall, free-to-trade index funds are reliable and risk-averse sources of profit over the long-term, and are therefore particularly useful in achieving financial goals such as retirement planning.

DIRECT STOCK PURCHASE PLANS (DSPPs)

Direct Stock Purchase Plans allow investors to buy stock directly from a company without having to go through a broker. Companies use a third-party transfer agent to issue shares to their employees, and the public, as accessibly as possible.

Amstock, Computershare, and Wells Fargo Shareowner Services are some of the more well-known transfer agents, handling huge companies like Walmart and The Coca-Cola Company.

DSPPs vary from company to company in terms of their minimum start-up fee, how they handle reinvesting dividends, and how they price selling fees. Some don’t charge fees at all, while others can be quite expensive.

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