How to Invest in an 801k
- 1). Know the stability of the stocks in which you want to invest. Due to the fact that you are not using a stockbroker to facilitate this investment, you must understand the fundamentals of the company in which you are thinking about placing your money. Look at their company earnings, direction in which their price is trending, recent company changes and years they have been in existence.
- 2). Familiarize yourself with 801k investment terms. Owning a Direct Purchase Plan (DPP) allows you to own stock shares in a company for the first time. However, directly investing in an 801k plan using a Dividend Reinvestment Plan, or DRIP as it is commonly known, gives the opportunity to reinvest the dividend of a stock that you already own. This is the reason that you need to buy at least one share of stock in a company to participate in a DRIP 801k investment plan. According to wall-street.com, there are more than two thousand companies offering one form of Direct Purchase Investment Plan to their clients.
- 3). Plan to purchase at least one share of stock in the company beforehand. Make sure that you are prepared to buy one share of stock before you invest in a DRIP 801k as most companies stipulate this as a requirement to participate in this type of 801k. Understand that you will have to pay taxes on your direct investment.
- 4). Open an account with the company of your choice. Contact the company directly or use a website such as Sharebuilder.com to directly invest your money. Purchase the amount of stock share that you desire from the company. Let the company know the number of dollars that you want them to invest into your stock of choice on a monthly basis.
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