For the past century the stock market has produced an average rate of return of approximately 8.0 percent, according to the Forbes website. While the return on individual stocks may vary significantly, the long-term potential growth for equity investments makes them attractive to many investors. There are a number of ways that you may invest in the stock market without the need of a credit check.
1. Contribute to your qualified retirement program at work. Employer-based qualified retirement programs include 401(k) plans, simplified employee pension (or SEP) IRAs and SIMPLE IRAs. These plans allow participation by all employees who meet certain longevity and compensation requirements. Many qualified plans offer a variety of investment options, which may include equity mutual funds. Inform your plan administrator that you wish some or all of your contributions to go toward the purchase of stock mutual funds.
2. Open a direct stock purchase plan account with an individual company. Not all companies offer direct stock purchase plans. You will need to contact the company's investor relations department and inquire about the availability and eligibility requirements for participation in such a plan. Enrollment typically requires you to complete a new account application. You will need to provide certain personal information, such as your Social Security number, which is used for tax reporting and withholding purposes. You may be asked to provide contact and banking information as well as instructions regarding reinvestment of dividends.
3. Sign up for your company's employee stock purchase plan. This type of program allows employee's to purchase shares of company stock on a regular basis through payroll deduction. Employee stock purchase plans may vary from employer to employer, and some companies may not offer them. You must typically sign up for your company's plan when you are hired or during an open enrollment or offering period. Internal Revenue Service regulations limit the dollar amount of stock that you may purchase through an employee plan.
- While no credit check is required to participate in employer-sponsored plans, your employer may perform a credit check as part of the hiring process.
- Financial Industry Regulatory Authority: What to Expect When You Open a Brokerage Account
- Financial Industry Regulatory Authority: Investing with Borrowed Funds: No "Margin" for Error
- Forbes: How To Open Your First Online Brokerage Account, Zack O'Malley Greenburg, 01.26.11
- IRS.gov: Publication 560, Retirement Plans for Small Business
- Fidelity: About Employee Stock Purchase Plans
- Kelloggs: Direct Stock Purchase and Dividend Reinvestment Plan