Can you buy stocks without a broker? (Find out how)

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buy stocks without a broker

Did you know that nowadays about anyone can invest in the stock market? Long gone are those days when in order to buy a simple stock of a company you had to go through a tedious process full of paperwork and middlemen. Believe it or not, today you can buy stocks without a broker, or that boring paperwork, and all from the comfort of your home.

Is that even possible? If so, how all that meticulous process would work? Seek no more! Keep reading to learn how the process of investing through a broker really works and how you can use new alternatives to buy stocks without one.

What is a broker?

Brokers are institutions or individuals that operate in the financial market, principally acting as intermediaries in exchange for commissions. In general, they can work independently or linked to a bank.

Also known as stock brokers, these companies look to serve as “middlemen” between investors and the institutions that emit assets, like Certificates of Deposit, mortgage bonds, stocks, investment funds, etc.

Although brokers originally had the intention of making the investing process easier, in the end, the cost of their service could significantly reduce the profitability of your investments. For this reason, buying stocks without a broker has become more and more popular during the last couple of years.

What services do brokers offer?

Brokers offer a wide gamut of services to their clients, like investing advising and consulting, asset management, buying and selling securities, financial market analysis, and information on the economic sector.

In the past, investors would send buy and sell orders to brokers over the phone. Now, even though investors should have an account with a broker, the majority of transactions are done online. (Remember this, it will be important later)

However, you should consult with your country’s laws and legal specifications to know who is keeping tabs on brokers that operate where you live.

Are there any cons to using traditional brokers?

Just imagine… the possibility of finding different options in which to invest, from various financial institutions, all in the same place. This is the main benefit that brokers offer.

Nevertheless, the fees needed to maintain the application for clients, in addition to administrative fees on some products, may take away a significant portion of the investor’s profit (yup, that’s you).

Additionally, depending on the time frame of the investment, if you pay a fee each month besides the broker’s custody fees, the costs could weigh a lot when you make other transactions.

Another important factor to consider is the broker’s commissions. Investors usually tend to look over these. Just picture this…you’re looking to invest and diversify your portfolio, but at the same time you’re paying for the business of a bunch of middlemen without even realizing it.

If you keep a diversified portfolio and are constantly trading in the market, the rest of the broker’s services may get to compensate for these costs. However, if you only keep a couple of fixed-income investments, you may have to use a portion of your returns to cover the operational costs for the broker.

Is it possible to buy stocks without a broker?

If you’re familiar with any basics of economics, you should know that the intervention of any middleman just makes the final product to be more expensive. This reasoning occurs in the stock market as well.

To escape all these additional costs you can take a DIY approach to investments and do it on your own through a brokerage firm.

In simple terms, a brokerage is basically the storefront where investors buy stocks, bonds, and other financial securities. Brokerages are different from brokers in that they generally don’t charge any fees for buying and selling stocks. They make up for their costs from other sources such as payments from exchanges and trading fees charged for other products.

Now, how to get access to brokerage firms? Remember we were talking about how the world of financial services now uses the almighty internet to work? That’s the case with brokerage firms as well.

Nowadays, most digital investment platforms work with brokerage firms to provide all the necessary investment services. In this way, they take care of all the brokerage processes and provide a very easy and simple way for investors to put their money into the stock market. 

How does an investment platform work?

You use your laptop or your smartphone to buy clothes, books, and even educational courses online, right? Why not use them to buy stocks?

As we just mentioned, online investment platforms are a pretty handy tool if you’re looking to buy stocks without a broker. They have been designed to take care of all the legal and financial brokerage procedures behind the scenes to allow you to become an investor with just a click.

Also, besides buying and selling stocks and other financial assets, most platforms have additional features within their system that help you to track the stocks you’re interested in, compare one stock to another, and find news about the most important public companies.

Take the FlexInvest platform for example. This not only gives you instant access to hundreds of stocks from your favorite companies but also gives you the chance to invest in them with as little as $5. It also includes ratings from professional stock analysts and margin plans to let you increase your buying power to invest more.

To wrap it up…

Stock brokers definitely can play an important role in the investment process as their work may be valuable when it comes to making investment suggestions and taking care of your portfolio. However, modern technology has turned investments into one more thing most people rather take a self-hands-on approach on.

If you’re looking to buy stocks without a broker, consider using one of the online investment platforms out there. And make sure to give FlexInvest a try! It will get your account set up in a matter of minutes and set you up halfway to the start of your investing journey.

Also, if you’re just starting in the investing world, chances are you don’t feel that confident to explore the strange tides of the stock market yet. If that is the case, take a look at our article on how to invest in stocks, it will give you a beginner-friendly guide through the whole process, from setting your investment strategy to buying your first stock.

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