Fractional share investing is a type of investment that gives you partial ownership and control over a company. It’s similar to buying stocks or bonds, but it has one significant difference: Since you don’t own any business assets (in this case), there’s no risk of losing capital. This means that your money is safe if you follow specific guidelines about how much funding to request and what type of company you want to invest in.
What are fractional shares?
Fractional share investing is a way to invest in a business without purchasing the full share. It’s similar to fractional jet ownership, where you buy a percentage of an aircraft so you can use it whenever you want. You’ll pay less than what it would cost to purchase outright but also get access to something that might otherwise be unavailable.
How do I buy fractional shares?
There are several ways to buy fractional shares online, through a broker or stock exchange, or through a fund. To purchase fractional shares online, you’ll need to go through an online brokerage account provider. Fractional share investing is not available directly from many major banks and credit unions that offer traditional brokerage accounts—but you can use your existing bank account to open one with another financial institution that offers this service.
If you already have an account with a traditional brokerage firm, they will likely allow you to invest in fractional shares. Of course, you’ll still need an account specifically designed for this purpose—as regular investors do. But the process should be familiar if you’ve bought stocks before. Just place orders like normal!
“Gone are the days when you needed to save hundreds to buy a single share of today’s leading companies. With fractional trades, you can buy shares in real-time for as little as $5,” says SoFi experts.
Why should I buy fractional shares?
You can buy fractional shares with a low investment. However, most traditional investors are limited to how much they are willing to invest in a single company, but fractional share investing allows you to make multiple investments without needing a large sum of money.
Many people would like to help companies working towards positive change in the world, but they need more money to spare on making an actual investment. Fractional shares allow these people to show their support while still being able to afford it financially and logistically.
Are there any drawbacks to buying fractional shares?
While you don’t have to sacrifice the potential for a high return by investing in fractional shares, there are some drawbacks. For one thing, you won’t get to participate in company events or vote at annual meetings (assuming that your company has annual meetings). That may not be a huge deal if you’re only invested in stocks that are already trading on the stock market—but it could be vital if you’re considering buying into an early-stage startup and want more of a say than an ordinary shareholder would have.
If you’re looking for a way to invest in a company without buying its entire share, fractional shares might be the answer. Instead, they allow you to buy less than 100% of ownership in any company you choose without worrying about having enough money. It’s important to note that this isn’t suitable for everyone and requires careful consideration before deciding how much money is invested—but it can still be an excellent option if used correctly!
