Ask Matt: Are 'street name' stocks risky?

Q: Are 'street name' stocks dangerous?

A: Street tacos are delicious. Street drugs are dangerous. Owning stocks in street name is neither.

Investors have three main ways to hold stocks: paper certificates, direct registration and street name. Street name ownership is the default form of holding stocks at most brokerage firms and is typically the best. Stocks held in street name are registered in the name of your brokerage firm, not yours. It's up to the brokerage to keep track of who owns what shares. Owning stocks in street name has several key advantages, including making the brokerage responsible for safeguarding the shares, unlike with paper certificates. Street name ownership also gives you the freedom to quickly sell the shares or put limits on the way they're sold.

With direct registration, shares are registered in your name. There are advantages to this, too, in that you get dividends and correspondence directly from the companies. But selling can get a bit complicated. You can sell directly through the company's direct investment plan if available, but there might be fees or delays in when the orders go through. If you want to sell through a broker, you need to instruct the broker to move the securities to their books before they can sell.

Paste BN markets reporter Matt Krantz answers a different reader question every weekday. To submit a question, e-mail Matt at mkrantz@usatoday.com or on Twitter @mattkrantz.