ATLANTA, GA (August 23, 1999) -- A common question that comes up on our Drip message board is, how do you buy the first share when the first share can't be bought directly from the company? In the interest of good research, I decided to try buying a first share of a Drip myself. I'm not going to mention the company I chose because it's irrelevant. Suffice it to say, I found a good stock that offered a plan with monthly automatic investments and no fees (which was less important to me than the automatic investments). It did require me to buy the first share elsewhere, though.

I started off by researching how to buy that share -- I asked the experts. Yes, I asked the question in our Drip Basics message board. My message led to 25 answers on the board and 3 e-mails. Thanks to all of you out there for answering me.

Some people have done very well buying their first share from a full-service broker. That surprised me initially, but I suppose the individual broker may have some leeway with what he or she charges for commissions. It probably is an effective way to attract new customers. Many of the respondents used their discount broker and had varying experiences. The deep discount brokers don't have the best customer service, and a couple people reported difficulties getting the first share. However, some praised the low costs of these brokers.

There was a lot of praise for Waterhouse Securities. Apparently, they charge a very low commission and no fee for issuing the certificate. Also, their customer service is pretty good -- they have regional offices, and getting someone on the phone is pretty easy. I checked with my discount broker, E-Trade, and the process is simple with them, too. You can buy one share, and then request a transfer in certificate form on a different section of the website. I didn't see any extra charge. The estimated commission was $19.95, which wasn't bad, but other brokerages were much cheaper, from what I read in the different posts.

I should mention that many brokerage firms will tell you that they offer "free dividend reinvestment." I'm not aware of any brokerage that offers optional cash purchases into Drips that you could hold in your brokerage account, though. I'm certain we will see that someday, but I'm digressing.

The final way that I considered was to buy the share through Temper of the Times Enrollment Service. Temper charges $15 to Moneypaper subscribers and $20 for non-subscribers to purchase the first share and enroll you in the company's Drip. That's not a bad deal, since it saves the trouble of obtaining the paperwork from the company and sending it in yourself. A lot of the Fools who responded to my question used this method and were quite happy. Since it was the same cost as buying the first share through E-Trade, and I was not willing to set up another brokerage account, the decision was pretty easy. I printed out the form directly from Temper's site and sent it with a check for the most recent cost of the stock, $20 in fees, $0.50 for the commission, and 10% for a cushion (refundable after the purchase).

If experience is any guide, I expect to wait eight weeks or so before I see all the paperwork arrive. When that happens, I'll cover the next steps (getting the automatic purchases started and so on) in future columns. Again, I'd like to thank everybody that responded to my post. It's what makes the message boards so worthwhile.

For more on starting direct investment plans, visit these articles: