What are fractional shares?
Fractional shares are like buying a piece of a company's stock rather than the whole thing. Instead of counting how many shares you are getting, you can invest a specific dollar amount. Let's say you put $100 into a stock, and one share costs $75 – you would end up owning one share and a third.
Why might investors, especially beginners, buy fractional shares?
Affordability:
Fractional shares help you invest in stocks that would otherwise be too expensive. For instance, if a single share costs $3,000, you would usually need $3,000 to buy it. With fractional shares, you can invest any amount, making it possible to start with less money.
Diversification:
Some popular stocks are costly and building a diverse portfolio with just a few shares of each could be expensive. With fractional shares, if you have $6,000 to invest, you can spread that money across different companies, even if their shares have different prices. This way, you can build a more varied investment collection.
Optimizing Investments:
If you routinely add money to your investment account each month (known as dollar-cost averaging), fractional shares let you use the full amount of cash. Without them, you might have to wait until you have enough to buy a whole share, leaving some money uninvested. In simpler terms, fractional shares make it easier for beginners to invest in a way that suits their budget and goals.
Taking The Next Steps!
If you are diving into the world of investing for the first time, fractional shares may be a fantastic starting point! Your initial move? Explore potential online brokers that provide fractional shares and open an account. Do not worry about feeling overwhelmed – taking this step is more straightforward than you might think. Platforms like Fidelity and Charles Schwab offer fractional shares, making it all the more accessible. The key is to embark on this journey with curiosity and conduct your own research. You might just discover that navigating this process is even more straightforward and enjoyable than you anticipated!
Disclaimer: The information provided on this website and blog is for educational and informational purposes only and should not be construed as financial advice. Readers are encouraged to engage in their own research and verify information using other reliable and scholarly sources. Access Equity DeFi LLC is not liable for any losses or damages incurred as a result of using the information found on this website.
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