Mint Money Knowledge Center: What is a direct investment plan (DIP)?

The DIY investor has benefitted greatly from the development of the Internet and all of the investment tools that the Internet has to offer. But there is one DIY investing tool that has been around since the 1960s and it is a way for any investor to buy stock without having to pay fees to a broker. Direct Investment Plans (DIPs, also known DRIPs for Direct Reinvestment Plans) are plans that allow you to buy stock directly from a company and save a lot of money.

What is a direct investment plan

 

How Do DIPs Work?

According to DirectInvesting.com, an investor has to do some research to determine which public companies offer DIPs because the SEC made it illegal to advertise DIPs in the 1960s. But thanks to the Internet, it is now very easy to find companies that sell stocks directly to investors. All you have to do is find a company that offers a DIP and then buy stock directly from that company. While you do not have to pay a broker, there may be fees that the company charges to use its services.
 

Buying In A The Bottom Floor

According to the SEC, an investor needs to check with a company before buying into a DIP to find out what is required. Most companies have an initial amount of shares that must be purchased to get involved, while others may have a designated initial investment.

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