Do you have to buy a block of company shares when trading stocks? Or, can you buy a single share of stock? And, how are shares of stocks held if I choose to buy through a trading account? These are some basic questions many investors seek answers to when they begin to invest in individual shares of stock.
Brokerage Accounts- Minimum Purchase Requirements
When opening up either a qualified or non-qualified trading account, be sure to inquire into the methods in which the shares are traded as well as what the initial and ongoing minimum purchase requirements are. Most traditional brokerage accounts will require a minimum purchase amount in order to buy shares of individual stocks, ranging from $500-2,000, although some brokerage firms will allow investors to start with a smaller deposit amount if they establish an automatic purchase program linking to an existing checking or savings account. In addition, most brokerage accounts will charge ongoing maintenance fees as well as management fees if the account balance falls below their stated minimum.
How are Shares of Stock Held?
If you own shares of stock, it is unlikely that you hold the actual share certificate itself. There are three primary methods in which shares of stock can be held; street entry, book entry and physical ownership.
Contrary to popular belief, when you buy shares of stock, they aren’t sitting in a secret or secure vault with your name on them. In today’s electronic age, shares of stock are registered in either the investor’s name or the brokerage firm’s name, making not only accounting of the shares simple and easy, but ownership transfers with the touch of a button possible.
Book entry describes a system of tracking stock ownership without the physical issuance of the shares themselves. Most online brokerage firms utilize this tracking method for their clientele.
Street entry describes the process of holding shares of stock in the brokerage firm’s name rather than the individual investor’s. Many firms prefer this method of accounting as it makes transferring shares back and forth to customers easier than book entry.
These technological advances and ownership options mentioned above have caused physical ownership to virtually go by the wayside. When a stock owner physically holds the shares, they are responsible for their upkeep. Making changes to stock held in this fashion can pose particular challenges, not to mention isn’t convenient, as the owner must take the physical shares to a brokerage house or trust the mail system to deposit, sell, exchange, etc. Despite these challenges, some investors desire to hold a share or two of stock physically.
One alternative method of holding stock, which is really more of a novelty than anything, is to buy a single share of stock for display, through companies such as OneShare.com.
For investors seeking to commemorate their stock ownership, or to give a unique gift of stock to another, the concept of Oneshare.com was born. Now, individual shares of stock are available for purchase. Whether investors are interested in a particular brand because of its innate value, or because their physical shares of stock are colourful and unique, making them great when hung on the wall, a variety of options exist on the website for purchase. When stock is purchased via OneShare.com, all of the standard rights of ownership exist (voting, annual reports, etc.), so it is just as if you were holding that share of stock in your brokerage account. Stock shares are available from a variety of brands and can be purchased ala carte, or personalized with framing options.
To summarize, shares of stock can be purchased and held in book, street or physical form depending upon the trading platform you have selected. And if you are looking to hold stock just for fun, you can purchase a single share via OneShare.com.