Which is better, to take delivery of the stock certificates or to leave your stocks in a street name?

You can get the physical stock certificates if you want to secure them yourself or you can leave them with the brokerage.However, there are both advantages and disadvantages to holding the stock certificates.You will need to analyze whether it is best for your situation to hold your stock certificates or let your brokerage hold them for you.

Street Name is the term used when securities are held in the name of a broker or other nominee, as opposed to holding them in your own name.You tell the broker to purchase the stock and they go and purchase the stock in their brokerage name.They then adjust your records to show that you own them, but the company will see the brokerage owning them.

Stock is how a company sells shares of ownership.They do this in order raise capital to start business or make needed purchases.You can own a portion of the company by purchasing their stock.As a stock owner or holder of record your stock certificate signifies ownership in the company and represents a claim on part of the corporation's assets and earnings.When they issue the stock it can be issued as a certificate.Most often all of this happens electronically.

When you become a shareholder and purchase a security, whether through your broker or from the company itself, you may request the actual stock certificates sent to you.Historically, all stocks were issued in this manner.However, with technology today the preferred method is now to have the transaction completely electronic.You would never see the certificate and the brokerage would not hold one on your behalf either.

The advantages of holding a physical certificate include:

The company knows how to reach you and will send all company reports and other information to you directly.You are the holder of record so all communication comes directly to you from the company.You do not have to depend on the brokerage to send these communications and updates to you.

You will have the stock certificates in hand to use as collateral for a loan.You may need to get a secured loan from an institution.These stock certificates are part ownership of the company so you will be able to find people who will take them as security to loan you money.

The disadvantages include:

You will have to send your stock certificate to your broker or the company's transfer agent in order to execute a sale.This process could take up to several days.Additionally, timing is very important when dealing with stock sales and purchases.Minutes can be important and days could really be unbearable when a stock is falling.

Dealing with certificates is more expensive than electronic trades.You will most likely have to pay a fee in order to receive a stock certificate.If you lose your certificate, you may be charged a fee for a replacement certificate.Proving your ownership can also be a challenge.

You will have to update the company each time you move or change addresses.Usually, the brokerage takes care of all the communications for you.You will now have to contact each company that you own and communicate directly with them.

You will not have the same guarantees from the government on your purchases.The government backs certain amounts of purchases in stocks.You will not have the government backing when you deal with the certificates.

In summary, you can request to have your stock certificates sent to you so you can hold them.However, most people find the advantages of having the brokerage hold them in street name far outweigh the advantages of holding the stock certificates themselves.

Investing

Which is better, to take delivery of the stock certificates or to leave your stocks in a street name?