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Share Exchange GuidelinesHow To Coordinate Group Buys
Date: 1/1/2009 10:45:05 AM
Frequently Asked Questions
Author: dfish Country Flag
Subject: 14712/35174 - Re: No US group buys
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In the US there are Direct Investment plans. More than 1,000 US companies offer direct investment plans. Americans can buy shares directly from these companies without using a broker.

It's important to also understand the terminology used here. When we say that there are 1,300 companies with Direct Investment Plans, we're talking about Dividend Reinvestment Plans, or DRIPs, which allow not only teh reinvestment of dividends but also the investment of additional cash. The additional cash feature is something that most U.S. DRIPs have allowed for at least two decades.

This is not to be confused with direct-enrollment plans (a subset of DRIPs) that even allow investors to purchase their first shares directly from the comapny or its agent. These are often designated as DSPs, or Direct Stock Purchase plans, but that is a misnomer...since most DRIPs always allowed direct purchasing of additional shares. So, of the 1,300 or so DRIPs, maybe 500 are also DSPs or, more correctly, direct-enrollment plans. And even when a plan does allow direct enrollment, it also continues to offer enrollment to shareholders, usually of just one share. That means that, for example, a potential investor has the choice between a $1,000-minimum direct enrollment in Bank of America and an enrollment after first purchasing one or more shares of BAC...which means that they can get enrolled for under $100, including the cost of a fee/commission. Also keep in mind that even direct-enrollment plans usually charge an enrollment fee (generally $10 or $15) and, unfortunately, have a high correlation with high (ongoing) fees...which will be charged no matter how one enrolls. (BAC is an exception in that it's a no-fee plan).

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