obxfisherman wrote:Hello all, I am curious regarding your opinions on DSPP. I recently opened one with Disney. I like Disney as a company, and I plan to invest with them for my lifetime. Don't plan to sell Disney stock anytime soon. anyway do any of you use a direct stock purchase plan? if so what company? why do you like that company? If you don't like DSPP why don't you like them? Thanks for your perspectives.
I don't like them.
1. It's an accounting headache. It's much better to keep shares of multiple companies in a centralized account, where you can view all your positions together. If you're uneasy about having everything at one institution, you can do what I do by having individual stocks at one company (Fidelity for me) and index ETFs at another (I have most of mine at Vanguard). I'm not worried about the solvency or effective regulation of those institutions, but either one of those could be vulnerable to hacking.
2. Years ago, when brokerage expenses were higher, a DSPP could have saved real money. These days, discount brokerage expenses are low. If a $5 or $10 commission per transaction sounds like a lot, then you're probably better-off with low-cost, no-commission index ETFs...or just making a smaller number of purchase transactions each year (each with a larger sum).
3. If you're going to do the work of picking individual companies, then the prices you pay (and sell shares for) matter a lot. DSPPs usually force you to take whatever the day's closing price is.
How many individual companies do you plan to invest in?