Even though I cannot attest to a lot of the criticism that the transfer agent computershare.com receives on a regular basis as a forum for buying stocks, I know a lot of people have written me, saying, “They’ve gotten a lot of bad online reviews. I’m not comfortable going there, are there any other options worth looking at?”
Normally, I’ve pointed to something like Sharebuilder if your goal is to keep costs low because they have a special plan that lends itself to dollar-cost-averaging into whatever you want (pretty much) for $12 month (which allows you to pick 12 different things to invest into each month). Or, you could just go through a brokerage house like Charles Schwab, pay the $7.95, and go to bed knowing that your money is secure. Given this is your life’s savings we’re talking about, fretting over a few bucks here and there could be missing the forest for the trees.
Now, though, I have something more specific that I can point to: LOYAL3. You go to the website loyal3.com, and the process is pretty simple: you pay absolutely nothing to buy or sell any stock that is listed on their menu of options. For someone looking to invest $50 here, $100 there, to build long-term positions in stocks in a low fee way, it’s a dream come true. They let you invest for a minimum of $10 per stock, which has got a lot of people raving that LOYAL3 is on to something good here.
What happens is this: companies are looking to raise capital in a very low cost manner. They pay LOYAL3 a negligible fee to carry them, and then the investor is able to provide the company with fresh capital by purchasing shares of the company. It’s free, because you’re a low capital source for the company; why issue bonds that would require seemingly perpetual interest payments when you can create a very modest amount of shares that infuse the company with cold, hard cash? That’s why the investment maximum is at $2,500 monthly; the companies don’t want to get flooded with share dilution, but rather, have a nice amount of incoming cash on hand to store in the corporate treasury.
A lot of the attention at LOYAL3 is aimed at marketing IPOs, but unless you see Mars Candy show up on an IPO offering one of these days, they’re probably not going to be something you’re interested in.
They do have some great selections of companies that you can purchase under this no fee to purchase or sell stock arrangement: Anheuser-Busch Inbev, Coca-Cola, Walt Disney, Dr. Pepper, Hershey, Kellogg, McDonald’s, Mondelez, Nike, PepsiCo, Unilever, and Wal-Mart. They also let you buy into Google and Berkshire Hathaway, which are probably the greatest non-dividend paying companies that would mark excellent additions to a long-term portfolio.
This is the kind of thing that should be in the arsenal of someone looking to make investments of less than $100 per month, or build a diversified collection of stocks over time by investing $300-$600 per month.