Direct purchase plans

[bigtimedreamer]

Hi can some one please help me,

i see in the us you can purchase shares bit by bit with direct debits weekly / monthly for small amounts directly from the company,

do companies here in oz do the same thing i have a small amount of shares in EGO but would like to start buying shares in bigger better companies but dont have the outlay at the moment, If we dont do it here in oz can i buy in us from here like that ?

has anybody done this or looked into it

please help the more i look into it the more i get confused, i think the net is over loaded with information its hard to find what ya need sometimes ,
thanks ,
bigtimedreamer

 

[burglar]

... purchase shares bit by bit with direct debits weekly / monthly for small amounts ...

If you buy Index shares based on say ASX200 you get exposure to top 200 ASX companies with one purchase.

I believe there is a way to put small amounts towards your portfolio.
I don't know how, personally.
But I remember posts about ANZ "something or other" account, that achieves what your asking.

 

[davistev]

I have not ever seen that in Australia. I know what you are talking about and it is certainly possible in the USA. Direct Purchase is a great way to invest long term for small investors in a company you trust. I would say that Australian companies are just not interested in dealing with small allotments. It is a system left over from the depression days and was the main way to purchase shares before central markets came along.

Now, we have modern electronic trading exchanges and for $15 you can make a trade.

That said, it is still possible to do DRIPs in Australia. Dividend Re-Investment Plans. This allows you to forgo payment of Dividends in cash and allow the amount to purchase new shares without commission.

 

[Judd]

...........i see in the us you can purchase shares bit by bit with direct debits weekly / monthly for small amounts directly from the company..........

I know what you mean. At one stage, CSR did allow its shareholders to regularly buy shares directly from the company without going through a broker. I don't believe than any company listed on the ASX allows that now.

However, there are now other avenues which maybe offered by companies form time to time if they wish to raise cash.

The first being a Share Purchase Plan under which a shareholder may purchase up to $15,000 of shares in the company. Milton (MLT) has one on the go now but unless you were a shareholder before the SPP was announced you cannot participate.

The second is an entitlement offer where the company may make an offer to its shareholders to buy additional shares at a specific price and in a ratio according to the number of shares held. For example, BKI has such an offer and shareholders can buy one additional share for every 15 held at $1.48 per share.

Third is the option avenue where shareholders can issued with no cost options to buy shares in the company at a specific price but the option has an expiry date. An example is WAM which appears to do this on a semi-regular basis in order to raise more capital. You can purchase the options on the market for a trade or you can purchase them with a view of actually taking up the option to buy.

There are a couple of other methods such as Bonus Share Plans, ie exchanging dividends for these which normally attract no franking credits - it's a Capital Gains play but also useful for overseas shareholders who do not get the benefit, either in full or in part, of franking credits.

And then there is the DRP which you mentioned.