15 Reasons Fractional Shares Are Your New Investing Best Friend

In recent years, a new trend has emerged in the investing world that is increasingly becoming popular with investors of all ages, trading styles, and levels of experience.

This trend is known as fractional investing, and it can be a valuable aspect of a long-term strategy for wealth building and management through the stock market.

Fractional investing is exactly what it sounds like. Rather than buying an entire share of a company, fractional investing allows you to purchase a partial share of that company. This comes in particularly handy when you consider that a single share of some stocks can run you hundreds or even thousands of dollars a pop. For example, you could purchase a half of a share, one-third of a share, or even far less in many cases.

Fractional investing isn’t available through all brokerages, but more and more well-known trading platforms are offering users this option. Not only do fractional shares provide broader buying opportunities for active investors, but this approach is ideal for newer investors who want to start building a portfolio but don’t have a large sum to start investing with.

Here are 15 reasons why fractional shares are your new investing best friend and a fantastic option to incorporate into your long-term investment thesis.

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If you’re new to investing and want to invest in a wide range of stocks without spending too much of your hard-earned money just yet, fractional investing is a great way to accomplish this goal. With fractional investing, you can buy partial shares of top-notch growth, value, and dividend stocks that run for a premium based on however much you’re able to invest at that time.

Although you won’t likely experience the same rate of return as an investor who owns full shares of these stocks, you can still generate positive long-term returns while gradually building a diversified portfolio.

ALSO READ: Even Tesla Can Be a Penny Stock With Fractional Shares

Fractional investing is an excellent option if you have a small amount of cash to invest but you want to start making your money work for you sooner rather than later. Even with a modest initial investment such as $100, you can start your investing journey immediately and get one step closer to building a stronger, freer financial future.

Over the years, fractional investing has become way more mainstream, and most of the top brokerages offer this option to users. Depending on the platform you decide to use, you can even buy fractional shares for as little as $1.

While building your nest egg and paying down debt should always be a priority, you can do both while still investing in the stock market. The beauty of fractional shares is that you can make the most of the cash you have right now to invest in stocks that will be mainstays in your portfolio for years to come.

ALSO READ: Even Amazon Can Be a Penny Stock With Fractional Shares

While this isn’t always the case, quality stocks often come with a steep price tag. If you want to invest in stocks that can stand the test of time without spending hundreds or thousands of dollars right off the bat, fractional shares are an easy solution to make the investment amount you’re most comfortable with in high-caliber companies.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Fractional shares aren’t just for newbie investors. Whether you’re a novice in the stock market or a seasoned pro, fractional shares offer you flexibility to invest in any company you want for the price you’re willing to pay. For example, if you’re just trying to get your feet wet in a particular sector of the stock market or want to invest in a particularly risky stock without giving it too prominent a place in your portfolio, fractional shares might be the answer.

The good news is that even when you buy fractional shares of a dividend stock, you can still earn dividend income from that company. Remember, companies pay dividends on a per-share basis. While owning a partial share of a stock will mean you earn less in dividend income than an investor who owns an entire share of the company, you can still use your payouts to generate a second cash stream and use it to build your savings or reinvest into your portfolio.

Just like buying whole shares of a stock, fractional shares can play an important part in your goal to wealth building through the stock market. Even investing as little as $100 per month can help you to achieve consistent, above-average returns over the long term.

Achieving success as a long-term investor isn’t always about the dollar amount you invest but where, when, and how you invest your hard-earned money. Be picky about the stocks you buy and only put your cash into quality stocks that you’re willing to hold onto for three to five years at the very least, and preferably longer.

Investing in a diverse range of sectors and a mixture of growth, value, and dividend stocks that can produce and sustain returns is key to a successful long-term stock-buying strategy.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Fractional shares allow you the option to become part owner of the companies you want to invest in right now, rather than waiting until you have the money to buy an entire share of an expensive stock. For example, technology and e-commerce are two extremely popular, high-growth sectors to invest in, not to mention remarkably recession resilient.

The hurdle for some investors is that stocks in these industries often run for thousands of dollars per share. Fractional investing removes this type of hurdle and opens up whole areas of the market to entirely new groups of investors.

ALSO READ: 3 Ways to Start Investing With $100 or Less

In addition to stocks, you can use fractional investing to buy partial shares of exchange-traded funds (ETFs). Not only does investing in an ETF make you part owner of all the stocks it contains but also you instantly expand your portfolio’s industry makeup based on the sectors and companies present in that fund.

Whether you’re a more conservative investor or have a higher appetite for risk, fractional shares can help you meet your investing goals. You can buy fractional shares of stocks in just about any industry imaginable, and sometimes for an amount as minuscule as 0.1% of a share, provided you meet the minimum order value required by the broker you’re using.

Since buying a partial share of a stock means you can invest in the company you want for a fraction of the price, this enables you to add more stocks to your basket in a shorter period of time. In doing so, you can construct a solid foundation for your portfolio that you can build upon for decades to come.

ALSO READ: $5,000 Invested in These 3 Stocks Should Make You a Fortune Over the Next 10 Years

The rules for selling fractional shares can differ based on the trading platform you’re using. Many times, the process on the investor’s side of things looks exactly the same as if one was selling an entire share of a stock. If you decide to sell any fractional shares you own, make sure you understand the procedures that your broker leverages to meet its order fulfillment requirements.

5 Winning Stocks Under $49
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by the Motley Fool. I’d be sitting on a gold mine!” And it’s true. And while Amazon and Netflix have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Simply click here to learn how to get your copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Investors know that another market crash could be on the horizon, but there’s no way to know whether this could be weeks, months, or longer down the road. Now is the time to prepare for whatever the market has in store.

If you’re new to investing and want to start building your portfolio, fractional investing offers an excellent opportunity to construct a recession-resilient basket of investments right now with the amount of cash you’re comfortable spending and get one step closer to financial freedom.

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