By Dr. Bryan Stoker
One of the best ways to build wealth over the long term is to buy stock… but why would you ever pay full price when it’s so easy to buy stocks at a discount?
This article presents four simple ways to buy stocks below their current market prices. In general, the list below is in order of lowest savings at the top of the list to biggest potential savings at the bottom. These four techniques are all simple, easy methods any stock investor can use.
Enter a limit order to buy stocks:
A limit order lets you specify the price you want to pay, so just enter a lower price than the current market price and catch the stock on a dip. Of course, if the stock doesn’t dip, you won’t get the lower price.
Buy stocks at a limit price between the buy and ask price:
If you enter a market order to buy stock, you pay what’s called the “Ask” price. If you enter a market order to sell stock, you will receive the “Bid” price. As you might expect, the Ask price is higher than the Bid price. So to get a small discount, just enter a limit order between the Bid and the Ask price. For many stocks, you will actually save enough to cover your commissions using this technique. Some of the more popular stocks have a Bid-Ask spread of only one penny; obviously, in those cases, this technique won’t work.
Buy your stocks through a DRIP offering discount dividend re-investments:
Many popular stocks offer Dividend ReInvestment Plans (a.k.a., “DRIP”) where the stock’s dividends are automatically used to buy more shares of the stock. Not all… but many…, DRIP stocks also offer a discount when you purchase shares through the company’s DRIP plan. The discount typically ranges between 2% and 5%. If the stock you want to buy offers a discount DRIP, buy at least one share “in your name”… which means you will take ownership of an actual stock certificate rather than letting your broker hold it. Then sign up for the DRIP directly with the company. Then every time a dividend is paid, you will buy shares up to 5% below the market price at that time.
Buy shares outright from the company:
Many stocks that offer a DRIP also offer shareholders the privilege to buy more shares directly from the company. When you do this, you often will pay no commission since there is no broker involved. However, many of these companies also offer a discount price when you buy directly from the company. The discount typically ranges from 3% to 5%. To do this, join the DRIP as described above. Then contact the company, and tell them how many shares you want to buy and get one to thousands of shares up to 5% below the market price at that time.
These are just 4 of the simplest techniques; if you want to see 8 more ways to buy stocks at even bigger discounts, visit InvestOnlineInfo.com. And don’t forget to check the current market status before buying.
Article Source: http://EzineArticles.com/expert/Dr._Bryan_Stoker/261037