Many people are unaware that they can buy fractional shares with their brokerage. Fractional shares are smaller pieces of stock that you can buy with a dollar amount. If you have limited funds, fractional shares may be an affordable option for you. Fractional shares may be particularly beneficial for investors who are building a portfolio with a low initial investment. NerdWallet’s team of investment experts uses a proprietary scoring formula to determine which brokerage firms have the best fractional shares. The scoring formula considers over 15 factors, including account fees, investment choices, customer support, mobile app capabilities, and more.
Another benefit of fractional share investing is that it can help you build a diversified portfolio. Diversification is an investment strategy that aims to mitigate risk by purchasing a mix of investments. Fractional shares allow you to choose which stocks to invest in, and how much of each one to buy. While investing in a single stock could be risky, a portfolio of 10 attractive stocks will allow you to diversify your portfolio and reduce your overall risk.
Another advantage of fractional shares is that they are a great way to start investing without risking a lot of money. Imagine you have developed a stock trading strategy and identified a portfolio of companies to invest in. Imagine you can use a fractional share to monitor a diverse portfolio of companies. You could invest in companies like Apple, Google, United Health, Goldman Sachs, and more, without risking your entire investment.
In addition to democratizing ownership of stocks, fractional shares provide an affordable way to invest in a variety of companies. The technology and the companies that developed fractional shares are making it much easier for small investors to gain exposure to the stock market. With the advent of artificial intelligence, this trend will continue to grow. The next time you feel the urge to invest, consider buying fractional shares of your favorite companies. They are the next big thing in retail investing!
If you’re thinking of purchasing fractional shares, remember that you can’t buy more than you can afford. While you can buy fractional shares of Berkshire Hathaway, AMZN, and other high-value stocks, fractional shares may not make sense if you’re only interested in the stock’s growth and liquidity. If you’re trying to sell fractional shares, you should understand that it can take longer than you’d like.
The stock market can be intimidating, but investing with fractional shares can be a great way to make your first investments without spending your entire life savings. Fractional share investing can be a great option for those who feel intimidated by the stock market or have little cash to invest. By allowing yourself to purchase fractional shares, you can learn about investing without risking your entire life savings. There are many advantages to fractional share investing, but you should consider the risks.