Back before the days of electronic trading and online brokerages, companies issued paper stock certificates to verify how many shares in a company an investor owned. Today, shares are transferred between investors in electronic form and many companies are doing away with paper stock certificates altogether, although some will still issue paper stock at the request of an investor. You also can buy paper stock through third-party retailers, but you need to be careful about being sold a souvenir stock facsimile rather than actual company stock.
Although it may be possible to find legitimate paper stock certificates for purchase today, the world of electronic trading has virtually eliminated the need for these documents. More than anything, replica stock certificates are being used for decorative and recreational purposes.
Disadvantages of Paper Stock
Although it’s fun to hold your investment in your hand in the form of an official paper stock certificate, there are some disadvantages to documenting your investment through a piece of paper that could be stolen, lost or damaged. Instead of issuing paper stock to every investor, companies use the Direct Registration System to electronically track stock purchases. In the past, stock certificates had to be sent by mail to a broker or company transfer agent to finalize a sale. Managing stocks electronically allows sales transactions to be processed more easily and quickly.
Purchasing Paper Stock as a Gift
Stock in a company makes a great gift, especially for young people. Learning how to hold on to stock and watch it increase or decrease in value is a great way to teach kids about investment. Although most companies now issue stock in electronic form, it’s still possible to get a paper stock certificate that represents your stock gift. However, some of the most desirable companies to invest in have stopped issuing paper stock in the past few years, including Disney. GiveAShare.com, a source for single shares of paper stock, still issues paper stock from many publicly traded companies. For companies such as Disney that no longer issue paper stock, a stock certificate replica is provided along with a statement for electronic registration of the actual stock purchase. Previously, Disney stock certificates had been among the most sought after. Another source for single paper shares for gifts is UniqueStockGift.com.
Getting Paper Stock from Your Broker
Some stock brokers will help you get paper stock, provided a company issues it, by helping you request a stock certificate from the company’s transfer agent. Investors are typically charged an additional service fee for the request and the transfer of the stock from your brokerage’s name to your name. It takes a few weeks to receive the paper stock certificate. If your shares were not purchased through a broker, you can initiate the request yourself by locating contact information for the transfer agent in the company’s annual report or on the company website.
Catie Watson spent three decades in the corporate world before becoming a freelance writer. She has an English degree from UC Berkeley and specializes in topics related to personal finance, careers and business.