As an investor, you’ve probably heard that diversifying your portfolio is crucial to mitigate risk and maximize your returns. But what if you don’t have enough money to buy whole shares of expensive stocks? This is where Partial shares come in. With these fractional shares, you can invest a fraction of a share of a stock, making it affordable and accessible for everyone.
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What are Partial Shares?
Partial or fractional shares are a way to invest in stocks without buying a whole share. They are becoming more popular, especially among young investors who want to invest in expensive stocks like Amazon, Google, and Tesla. They offer a way to invest in the stock market without much capital. Additionally, Partial shares allow investors to diversify their portfolio by investing in a wide range of stocks, including those that were previously unattainable due to their high prices.
How do Partial shares work?
Partial shares work by allowing investors to buy a small percentage of a share of a stock. Let’s say you want to invest $500 in Apple, but the current stock price is $150 per share. Instead of buying three whole shares and having $50 left over, you can buy 3.33 Partial shares of Apple for $500, giving you exposure to the same percentage of Apple’s performance as owning three whole shares.
Partial shares are purchased through online brokerage platforms, and the process is straightforward. When you order a fractional share, the broker aggregates your order with others to buy a whole share on the stock exchange. The broker then divides the share among the investors who bought Partial shares.
Benefits of Partial shares
Partial shares offer several benefits to investors, including:
Accessibility – Partial shares make investing accessible to everyone, regardless of their budget. You can invest as little as $1 and own a fraction of a share of stock.
Diversification – Partial shares allow investors to diversify their portfolio by investing in a wide range of stocks, including those that were previously unattainable due to their high prices.
Low Costs – Partial shares have low fees compared to mutual funds and ETFs, making them an affordable option for investors.
No Need to Buy Whole Shares – With Partial shares, you can invest in a fraction of a share of a stock, making it affordable and accessible for everyone.
Easy to Buy and Sell – Partial shares are purchased through online brokerage platforms, making buying and selling them easy.
According to Sofi experts, “Partial shares allow investors to make investments with small amounts of money, diversify their portfolios, and minimize risk without buying an entire share.”
How to Get Started with Fractional Shares
Here are some steps to follow:
Choose a brokerage platform: Many online brokerage platforms offer partial shares. Research different platforms to find one that fits your needs.
Fund your account: Once you’ve chosen a brokerage platform, fund your account with the amount you want to invest.
Select the stocks you want to invest in: Most brokerage platforms allow you to invest in partial shares of individual stocks or ETFs.
Place your order: Once you’ve selected the stocks you want to invest in, place your order for partial shares.
Monitor your investments: Keep track of your investments and their performance. Review your portfolio regularly and make any necessary adjustments.
With Partial shares, you can invest in a wide range of stocks, including those previously unattainable due to their high prices. As an investor, it’s important to consider adding Partial shares to your portfolio to maximize your returns and minimize risk.