# Key Post: Buying US Stocks by 'Direct Purchase'



## fluppet (3 Aug 2006)

I would like to share with you my experience of buying US stocks by 'Direct Share Purchase' schemes.

Many large US companies provide the facility for small investors to buy their shares through them (or an intermediary). This avoids some of the hassle involved in buying through brokers, and is often as cheap as or cheaper than buying through a broker.

First you must find a company that you are willing to invest in that provides this service. You can check the website of the company, and you can browse lists of such companies on the websites of the above-mentioned intermediaries (such as [broken link removed] and [broken link removed])

Note that not all of the companies listed on the intermediary websites allow direct share purchase - some only allow dividend reinvestment.

Once you have chosen your companies, read the brochures to make sure you understand everything. The initial purchase fee usually varies from $7.50 for some companies, to $20 for others. Dividend Reinvestment charges also vary from no fee to a few dollars. There will also be a charge if you decide to invest more cash in the company at a later date (other than by dividend reinvestment), usually less than the initial purchase fee. There are also limits on the amount you can invest - a minimum initial purchase of $250 usually to a maximum of ~$150,000 for most companies.

You must then print out the application forms (online application is usually not allowed for international investors), and fill them out. Some companies' forms are geared towards US investors, even though international investors are allowed to participate. This might make it difficult to write your postal address correctly - I had to contact two of the companies I invested in because they got my address wrong. You can leave blank the fields that ask for SSN (social security number) etc.

As a foreign investor in the US, you are subjected to 30% with-holding tax on income (eg. dividends). However, as a resident of Ireland you can make use of the taxation treaty which reduces this to 15% tax (plus Irish tax). To do this, you must fill-out a W8-BEN form. I printed out the W8-BEN forms, filled them out and sent them with my application. It may, however, be better to just send-off the application form and wait for the company to send you out the form, because it is difficult to get the American standard paper size ('legal'), as we normally use A4 which causes problems for the scanners.

If you don't obtain a tax identification number from the IRS (there's a form to do it, see the IRS website), you will have to fill-out a W8-BEN form every 3 years, but if you do get one then your W8-BEN will be valid as long as your address is the same.

You will (I believe) be subjected to Irish CGT (capital gains tax) upon sale of your shares.

One further complication is that the cheque you use to pay for the share purchase will need to be in US dollars, and drawn on a US bank.

Once all that is complete, you should be all set. It usually takes around 2-3 weeks to receive confirmation of your share purchase. You then receive all normal shareholder communications as usual (annual reports, etc.).

Despite the few complications mentioned, I was very happy with this method of purchasing US shares and would recommend it to others.

I hope this was helpful...


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## RainyDay (4 Aug 2006)

*Re: Buying US Stocks by 'Direct Purchase'*

Thanks Fluppet - I've make this a key post for future reference.

My own experience is that the minimum purchase for Microsoft shares in this way was $1,000. It was also possible to open an account in trust for a minor. Anyone considering investment in US shares should ensure that they are comfortable with the currency risk involved.


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## Brendan Burgess (30 Dec 2007)

Key Post refreshed


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## basilbrush (1 Sep 2017)

These days the places to look for US direct stock purchase plans are Computershare (their US website and then click 'Buy Stock Direct'), Wells Fargo's shareowneronline, and AST Financial (a terrible website that makes it hard to find the plans, but they manage many of them so it might be worth the effort. I won't post the direct link to the page with the plans as that will probably change, but the easiest is to search for "ast financial buy stock direct").

The only other note is that the relevant paper size is 'US Letter', not 'Legal'.

Edit: Also, I should note that with the advent of other low cost means of purchasing US shares, like DeGiro, direct stock purchase is less attractive than it used to be, especially as DeGiro doesn't have the troublesome requirement of purchasing with cheques drawn on a US bank account.


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