Stocks are one possibility for building wealth over the long term. But what if you could buy a fractional share?
Fractional shares – A more affordable way to invest in the stock market.
Because the stock market has historically produced an average annual return of 10%, owning stocks is one of the best ways to accumulate wealth and multiply your money.
But in order to recognize those gains, you need a diversified portfolio that includes more than just cash. And if you want to add stocks to your portfolio, buying fractional shares can help get you there.
Accessible and inclusive
Fractional shares, also known as micro-shares and pieces of a stock, are an easy way for you to buy a portion of a company’s stock instead of needing to purchase a full share, which can be very expensive. This is much more affordable than buying whole shares for the average person and it’s a great way to learn about investing in the stock market.
For example, if you have $50 that you want to invest in Facebook’s stock, rather than purchasing one full-share (which would cost you close to $200), you could invest that $50 into fractional shares through your broker. Some companies allow investors to buy small portions of expensive stocks like Facebook or Amazon by allowing investors to buy micro-shares with prices ranging from just pennies on the dollar. This means that you can put some money aside each month and keep adding more money until eventually you can afford a whole share or choose instead to spread your money around several different companies.
Fractional shares are tiny portions
Fractional shares are whole shares that have been broken up and are offered in tiny portions. Some brokers offer fractional shares as a way to get people investing who can’t afford whole shares, which may be worth thousands of dollars. Fractional shares are great for people who want to try investing but don’t have enough money. They also allow investors to invest in companies that would otherwise be too expensive for them.
Invest as little or as much as you want with fractional shares
There’s no minimum investment required to purchase fractional shares, meaning you can invest as little or as much as you want. For example, if a share of Google costs $1,000 but you only have $100 to invest, you can still buy a piece of Google by purchasing 0.1 shares of it. If a share of Nike costs $80 and you want to get more than one share but don’t want to buy the full amount, say if you only have $160 on hand right now, you could purchase 2 shares for that price. And don’t worry about missing out on the next Amazon or Netflix because your bank account isn’t big enough—you can buy partial shares based on your budget and not sweat it!
And since you’re buying directly from the company rather than through a broker or third party, there are no brokerage fees and no commissions either (an important distinction from traditional investing). Because this method is so accessible and simple—you can do it from anywhere with an internet connection—you’ll be able to build your portfolio without losing sleep over whether or not it will grow in value quickly enough for when retirement comes knocking at your door.
Try investing without having to risk everything.
Fractional shares allow you to branch out and invest in companies that you otherwise may not have been able to afford, were they only available in full-share options. This opens up a world of new opportunities for investors who are looking to diversify their portfolios, or simply branch out and take some risks with investments they otherwise wouldn’t have considered.
And perhaps most importantly—it significantly reduces the barrier to entry. With no minimum investment required, fractional shares have opened the door for many investors who otherwise would have found investing too expensive or too risky, allowing them to get started with little more than pocket change.