$100 Invested in a Direct Purchase Plan

Forever Stamps Investment
($100 invested in Kelloggs direct purchase plan)
 

Investment Idea: $100 invested in 1.962 shares of Kelloggs stock using a Direct Purchase Plan.

Total Investment: $100

Total Time Cost: 00:20:00

Extra Costs: $0

Total Time Spent on Investment: Ten minutes researching about what a Direct Purchase Plan is, and ten minutes signing up and crediting a new ShareOwner.com account.

Research and Preparation:
A lot of my investments (being at the $100 price level) end up having fees and extra costs that cause the investment to almost never end up being profitable. When buying stock I am paying $9.99 per a trade at TDAmeritrade, and given some places offer trades for as low as $5, it would still be another $5, or in my case $9.99, charged when I sold the stock too. This means that all the current stock investments I have would need to earn over $20 just for me to break even!

Luckily there is another way people buy stocks and build a portfolio: a DPP, or a Direct Purchase Plan. DPP’s exist for a lot of the largest companies in America including Heinz, General Mills, CBS, and Kelloggs. I decided to choose Kelloggs as the company I wanted to purchase, because I gotta have my pops.



(I gotta have my pops)
There are couple of ways to buy direct purchase plan shares. The easiest is ShareOwner.com. It is run by WellsFargo and has access to a lot of different companies, so with one account you can buy shares in multiple companies, and help create a diverse and robust portfolio, a key to good investing. On ShareOwner, you can see a sortable list of all DPP companies. DPP’s often come with minimum investments, which were shown in the ShareOwner table. This limited which company’s I could choose from, but then I saw Kelloggs which did not have a minimum and is a company I feel pretty confident about.

As well as having a minimum investment, some companies also force you to already be an owner of that company’s stock before participating in the plan. Kelloggs was not one of these so it made it an even better option.

After finishing signing up for my ShareOwner account, I was given the option to fund my account. Either I could do it by mail or electronically. If you select the electronic option it then prompts you telling you you will need to pay a $15 electronic investment fee.

Electronic Investment Fee BSt
($15 Electronic fee BS)
Nowhere during the whole process did it mention this fee until the last page of the sign up. It gave a couple of options: either you can pay electronically or select pay by mail. When you select this option it does not mention any fee, but it seems like more hassle. Of course I did not want to spend an extra $15, so I chose pay by mail. Only after fully signing up did this fund by mail option also inform me I would need to pay a $15. Talk about hidden fees.

However through some glitch if you select pay by mail it creates your account and you can just fund the account electronically right away. I went ahead and did this and I still have never mailed in my $15 account funding fee. I assume one day they will get mad about it, but until then I saved myself $15.

A week or two later I received an email saying that the account was funded and I now owned 1.962 shares of Kelloggs stock. One of the main problems with buying it via the direct purchase plan was that I had no control over exact timing of my stock purchase. For all I know the moment I bought the stock it could have hit historic highs and I would be stuck buying it at the highend, meanwhile when I use TDAmeritrade I can choose an exact action to trigger when I buy the stock, and guarantee I am purchasing it at a price I want.

Two of the benefits of the DPP are that it allowed me to purchase exactly $100 worth of stock, making it very easy to stick to my $100 investment strategy. Also, the investment is on autopilot now since it is set to have all of its dividends the shares accrue to be reinvested into the buy, allowing my stock to grow.

A similar investment to a DPP is DRIP, or a Dividend Reinvestment Plan, another investment I can make through ShareOwner and another investment I will add to my portfolio very soon.

Reason for Investment:
Tired of being burned by the fees I got from each trade I made on TDAmeritrade ($9.99!) I decided to try out a Direct Purchase Plan, which allows me to buy the shares directly and not have to pay brokerage fees. However it is some what of a hassle and seems to come with hidden fees of its own ($15!). As for the company to invest in, I chose Kelloggs since I believe it is a strong well positioned blue chip company which can help balance out my portfolio. Simply put, I gotta have my pops.

Returns:
The return from a DRIP is based on the continuing growth of the shares and of the reinvestment of any dividend the shares produce put back into the investment. This investment is currently valued at the share price of Kelloggs times 1.962 (The number of Kelloggs shares I own).

To find an up to the minute price of my Kelloggs Direct Purchase Plan investment and my other investments click here!

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