Are you considering fractional shares brokers? Read about what benefits they might bring and how you can get started with one.
What are fractional shares?
Fractional shares are a portion of a whole share of stock. They are typically used when a person wants to invest in a company but does not have enough money to buy a whole share. Many brokers offer this option, although, not all. But is it useful for you?
Why choose fractional shares brokers?
Fractional shares allow people to invest in a company even if they do not have enough money to buy a whole share. This can be beneficial because it allows people to diversify their investments and get started investing in a company that they may not have been able to invest in otherwise.
For example, let's say you wanted to buy tesla stock and you have 50 USD to invest. For this example, we assume Tesla is trading at 800 USD. One share would cost you hundreds of USD, which you do not have to invest. With fractional shares, you can instead buy a part of the share.
Investing the full 50 USD would give you 50/800 being 0.0625 in fractional shares. Even though you do not own 1 share of the stock, the value you put in (50) will follow Tesla's market price percentage-wise.
Savvy investors might also use this function to create their own portfolio by deciding exactly how much money of their total account is invested per stock.
How do I buy a fractional share?
Fractional shares can be purchased through some brokerages. Make sure you investigate if the broker you want to go with, offers this option. Although fractional shares brokers can be found online, it can be hard to collect several without spending too much time. That is why below a list of several brokers:
|Broker name||Type||Review||Rating||Broker site|
|CMC markets*||Mostly Trader||Link||4.5||Visit broker|
|Trading212||Investor & Trader||Link||4.1||Visit broker|
|Bux Zero||Investor & Trader||Link||4.0||Visit broker|
|Admiral Markets||Investor & Trader||Link||4.0||Visit broker|
|Fusion Markets*||Trader||Link||3.5||Visit broker|
*If you choose a trading broker, please remember: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.