How To Buy Stocks Without A Broker | Expert Guide

Buying stocks is surely a great way to invest your money and the earlier you do that, the more time it has to grow. It may be a little intimidating especially if you’re wondering how to buy stocks without a broker.

According to Vanguard between 1926 and 2018, a 100% stock portfolio returned an average of 10.1% a year. Though there will be risks, it can serve as a sound source of passive income.

Here are some steps to guide you on how to buy stocks without a broker.

How Do I Buy Stocks Without A Broker?

These step-by-step guides will throw some light on how to buy stocks without a broker:

#Step 1. Set Your Goals

Your finances should have some semblance of stability before you decide to take any steps towards making a financial investment.

Your finance isn’t just what you earn. They are also your expenditures, potential expenditures, potential earnings as well as debts accrued.

You also have to be able to first tell yourself the reason you want to start investing – the goals you intend to achieve.

Would it be for just yourself or your immediate family as well? Is the goal supposed to be achieved in the next couple of years, or are the investment accounts for retirement?

These questions may be difficult to answer and work towards. However, they should be asked and answered as well as they would influence your next decisions.

There’s really no right or wrong answer, just what you want for yourself.

#Step 2. Set Some Money Aside

After ensuring you’re financially stable enough to embark on the investment journey, set some extra money aside. This money should be kept away from the risks of the new venture and should be the equivalent of the cost of living for at least 3 months.

This cash reserve would serve as an emergency fund just in case there are any irregularities in the earnings or there is a sudden need for unplanned expenditures. Also, it would help cushion the effect if your investment goes downhill.

#Step 3. Open an Account to Buy Stock

A retirement account is the most advisable place to start investing. This is mostly because they represent long-term investing.

Whether it’s a 401(k) plan or an Individual Retirement Account (IRA), they are tax-sheltered and allow you to stack your money for decades without investing it until you are ready.

Employer-sponsored Retirement Accounts

You’d start by confirming if your job provides that retirement account – 401(k) or a 403(b). Some companies may have restrictions based on the investments or years of service before any staff can participate.

HR would be the best bet to get that information. Confirm if there are any retirement plans and which are available. Ask questions about them. You don’t want to invest your money in ventures you do not fully understand.

Individual Retirement Accounts (IRAs)

You can sign up for the workplace retirement plan and also open an IRA. However, in the absence of the workplace retirement plan, you can stick to the IRA (Individual Retirement Account).

You do not have to have an employer to sign up for this.

Any investor, however, has to be over 18 years of age with a source of income. There are different options for IRA, so find the one that works for you.

#Step 4. Research Which Stocks to Buy

Considering the very many publicly traded companies offering shares of stock on the market, deciding how to buy stocks without a broker could be quite challenging. You’d have to carry out comprehensive research of these stocks and decide if you’d be getting growth, dividend or value stocks.

Growth Stocks

These are usually shares of young companies with high growth potential. They receive high turnover or revenue.

So, even if you want to buy the stocks without a broker, you already know that there is a possibility of making sound gains eventually.

Regardless of the price, the growth and profit possibility encourage investors to invest in their growth stocks.

Dividend Stocks

The goal of buying dividend stocks is to make money consistently from your investment regardless of the fluctuations of the stock prices.

The dividend stocks pay out a portion of the earnings to shareholders in form of dividends. Sectors like telecommunications and utilities may pay dividends.

Value Stocks

Value stocks are shares of stocks with initially discounted prices that are expected to appreciate as the market recognizes them.

You’re looking to buy low priced stocks and keep them while their value appreciates over time.

Make Use a Stock Screener

As the name implies, the stock screener helps you “screen” the numerous stocks and filters the companies that do not meet your conditions.

This is an important tool to use if you want to buy stocks without a broker. Though most brokerage accounts online offer the stock screener, there are several other available free versions online.

#Step 5. Complete Trades in Your Account

So, you have a brokerage account and you have applied various strategies to identify the stocks you want to buy. All that’s left is to actually carry out these trades in the account.

Now, there are a couple of things you should know if you want to buy stocks without a stockbroker. It’s a lot more than just going on an app to tap the buy button. You’ll be required to choose an order type that will give instructions to buy the stocks.

The most common order types are:

  • Market Order
  • Limit Order

Market Order

Stock prices change in split seconds so, the prices you see may not be the same when the market order is executed. This type of order tells you to buy stocks exactly at the lowest available price.

Limit Order

Here, you set an exact limit and only get to execute the buy if the stock price falls to your named price or lower within a set period. However, the trade will be canceled if the price never falls to the set price before the set period.

#Step 6. Use Dollar-Cost Averaging

Like I earlier stated, the prices of stocks are not constant, instead, they are steadily fluctuating. Dollar-cost averaging allows you to buy stocks with a particular amount of money at systematic intervals. Over time, you may realize that you had bought the stocks at a lesser price on average.

Dollar-cost averaging offers the chance to start buying stocks with the little bit of money you have available. You do not have to wait to buy them when the balance has built up and end up buying it at an extremely high price.

For instance, if you buy a targeted stock at $10 a share in the first week, $20 in the second week, and $18 in the third. That translates to about $16 on average that’s better than if you had gotten it all at $20.

#Step 7. Get Some Investment Education

If you want to buy stocks without a broker, this would help you make better decisions. There’s really no one who knows it all, so, you can always improve yourself.

Even as you continue applying the different strategies to grow your money, take out some time to continue building your knowledge on the laws of investing.

There are various ways to get this education. You could listen to CDs, take courses at community colleges, join investment forums, read books – like The Wall Street Journal. This guide on how to invest would also help you.

Know the investment strategy that works for you and surround yourself with investment experts to learn more from them and their experiences. All of this information will help you make informed decisions and lower the risks you may face.

Bottom Line

Buying stocks without a broker is surely not impossible. However, there are some things to know and some important steps to follow to make profits. The steps above would set you on the right part to making your money work for you.

Good luck!


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