Brokerage fees can be a deterrent for those unsure of whether to start investing in the stock market. Most people are unaware, though, that stocks in many of the most profitable businesses in the U.S. can be purchased without the help of a broker. By eliminating the middleman, commission costs are cut, and the investor nets a higher profit.

But this isn’t common knowledge to those who only follow mainstream financial media.

Here’s how it works.

Companies enlist a transfer agent once they’re listed on the stock exchange. This agent is responsible for the administration of the company’s share transactions. A popular agent companies use is called Computershare, which provides direct stock purchase plans for customers wishing to bypass the use of a stockbroker.

Using a direct stock purchase plan eliminates the need for a broker and raises your bottom-line. Many major companies use this type of plan, but not all.

Direct stock purchase plans have many advantages. Purchases can be scheduled weekly or monthly (thereby reducing risk), minimum investments are variable (usually ranging from $25-$2,500), the purchase of fractional shares is permitted, and dividends earned can be reinvested.

Although there are still fees, they’re often minimal in relation to brokerage fees. Initializing an account usually costs between $5-$20, purchasing shares ranges from $0.03-$0.10 per transaction, and selling shares normally constitutes a $15 fee, as well as $0.12 per share sold.

However, some companies don’t charge anything for stock purchases, account set-up, or dividend reinvestment.

Here are some figures for you to compare showing exactly how major companies make direct stock purchasing plans available to investors.

Walmart

Minimum amount to invest: $250, or 10 installments of $25

Account setup fee: $20

Share processing fee: $0.05

Yearly maximum: $150,000

Dividend reinvestment: none

The Coca-Cola Company

Minimum amount to invest: $500, or 10 installments of $25

Account setup fee: $10 (deducted from initial investment)

Share processing fee: $0.03

Yearly maximum: $250,000

Dividend reinvestment: charges 5% of the amount invested, to a maximum of $2

Exxon Mobil

Minimum amount to invest: $250, or 5 installments of $50

Account setup fee: none

Share processing fee: none

Yearly maximum: $250,000

Dividend reinvestment: none

Altria Group

Minimum amount to invest: $500, or 10 installments of $50

Account setup fee: $10

Share processing fee: $0.03

Yearly maximum: $250,000

Dividend reinvestment: charges 5% of the amount invested, limited to $3

Johnson & Johnson

Minimum amount to invest: $25

Account setup fee: none

Share processing fee: none

Yearly maximum: $50,000

Dividend reinvestment: none

Before investing your money it’s wise to thoroughly research both the business and sector in which that business is situated. Also, try not to invest everything in a single company. Rather: diversify. Identify your investing goals and needs, keeping in mind your risk tolerance. Remember that by avoiding the broker you are missing out on their counsel — so it’s your responsibility to learn about industry trends and the state of the market as a whole in order to best nurture your investment portfolio.

Featured Image: Depositphotos/© ra2studio