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What is Buying Outright?

Malcolm Tatum
By
Updated Feb 22, 2024
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As an investment strategy that is different from buying on margin, buying outright means purchasing an investment opportunity with liquid financial resources that are in the possession of the investor, usually in the form of cash on hand. Buying outright does not involve securing any type of loan in order to acquire a new investment, whether from a broker or a private source of funding.

Buying with cash rather than relying on a combination of cash and secured credit does have some advantages. Foremost among the reasons to engage in buying outright is that the transaction is a simple one. There are no allowances to be made for interest payments on a loan, no records to keep on the current status of a brokerage loan, and nothing that will need to be repaid, regardless of the future performance of the acquired stock or security. The investor has complete control of the investment, with no collateral tied up as part of the financing process. This means no additional resources are involved in the acquisition. It is strictly a cash purchase that, once complete, has no lingering loose ends to address.

Buying outright also makes the process of selling a stock or bond issue an easy process. The net profits that are realized from the sale are totally the property of the investor. There is no need to factor in payments other than the usual processing fees that are invoked by brokerage firms. A lack of incidental matters to address 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 his or her attention to other moneymaking projects.

While buying outright does have some advantages, there are situations in which the strategy is not the best method to employ. For investors who would have to tie up much of their cash assets in one investment opportunity, there is always the chance of losing a lot of money if the investment fails to produce revenue. Unless the investor has a great deal of cash reserves to call upon, buying on margin may be a much better choice when it comes to acquiring new stocks and securities for the investment portfolio.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Malcolm Tatum
By Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including WiseGeek, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.
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Malcolm Tatum
Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
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