Buying outright means purchasing an investment with cash, without taking out a loan. This method offers simplicity, control, and streamlined selling, but can be risky if a large amount of cash is tied up in a single investment.
As an investment strategy other than buying on margin, buying outright means buying an investment opportunity with liquid financial resources that are in the investor’s possession, usually in the form of cash. Buying direct does not involve securing any type of loan in order to acquire a new investment, whether from a broker or a private financing source.
Shopping with cash instead of relying on a combination of cash and secured credit has some advantages. Foremost among the reasons for committing to direct purchase is that the transaction is straightforward. There are no provisions for interest payments on a loan, no records to maintain on the current status of a brokerage loan, and nothing to be repaid, regardless of the future performance of the stock or acquired security. The investor has complete control of the investment, with no collateral attached as part of the financing process. This means no additional resources are involved in the acquisition. It’s strictly a cash purchase that, once completed, has no pending ado.
Buying direct also makes the process of selling a stock or bond issue an easy one. The net gains realized from the sale are wholly owned by the investor. There is no need to account for payments other than the normal processing fees invoked by brokerage firms. The lack of ancillary issues to deal with means that the actual process of selling stocks and securities is streamlined for the seller. With less time and resources involved in the transaction, the seller is able to quickly focus their attention on other earning projects.
While buying direct has some benefits, there are situations where strategy isn’t the best method to employ. For investors who are expected to tie up a large part of their cash assets in a single investment opportunity, there is always the possibility of losing a lot of money if the investment fails to produce income. Unless the investor has plenty of cash reserves to rely on, buying on margin can be a much better choice when it comes to acquiring new stocks and assets for your investment portfolio.
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