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What is direct investing?

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Quick Answer

Direct investing occurs when people put their money directly into investments rather than utilizing intermediaries such as stockbrokers, thus reducing the fees usually associated with these transactions, notes About.com. People may engage in direct investing in products such as stocks, bonds, mutual funds and real estate.

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What is direct investing?
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Full Answer

People who invest directly in stocks can do so using direct stock plans or dividend reinvestment plans, notes Investor.gov. Investors making purchases through direct stock plans buy shares directly from the company, eliminating stockbroker commissions. Some companies open direct stock plans to existing shareholders or employees, while others require minimum stock purchases. People who buy stocks through dividend reinvestment plans do so using dividend payments in stocks they already own, which are used to purchase additional shares.

People who invest directly in mutual fund companies cut out the fees of portfolio managers, which may include per transaction fees and commissions, states About.com. Direct investing in mutual funds is a relatively easy process, as most mutual fund companies allow people to make purchases via their websites. People who can spot opportunities and develop properties benefit from direct investing in real estate, as it cuts out fees and offers tax advantages over other methods of purchase. People with large portfolios who can withstand low-percentage returns benefit from individual bond purchases they make themselves, as bond fund managers charge fees and may engage in risky investments.

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