Anyone Can Invest Like a Rich Person Now. Here's Why
by Christy Bieber | Published on Sept. 8, 2021
You don't need to have a lot of money to invest, thanks to these major changes in the investment world.
Traditionally, it has always been a lot easier for rich people to invest money. There are a few reasons for that, and it isn't just because rich people have more spare cash.
But the good news is that things are changing. And because of some big shifts in the policies of brokerage firms in recent years, now anyone can invest like the wealthy do. Here's why.
Fractional shares and $0 commissions let everyday people invest like rich people
Two changes that have occurred in recent years have made it easy for anyone to invest like rich people do.
The first and most important change is that it's now possible to purchase fractional shares. Fractional shares are parts of shares of companies, rather than full shares.
For a long time, if you wanted to invest in a company, you needed the money to buy at least one full share of it. That becomes a problem if you want to invest in some of the biggest companies or the companies with the most potential for explosive growth. Amazon's stock, for example, costs more than $3,300 per share as of the start of August 2021, while the price of a share of Tesla tops $700 and the cost of a Facebook share is above $350.
When you had to purchase at least one full share, you were limited in what assets you could buy unless you were rich. Only wealthy people could make their investment choices purely based on which assets they thought had the best potential for growth. And if you had very little money, you might be relegated to penny stocks which carry a much higher risk of losses.
But now you don't have to buy full shares any more. Many brokerage firms now allow you to buy as little as $1 or $5 worth of a stock even if that means you get .001 of a share. You place your order to invest in an asset based on the dollar amount you want to invest, not how many shares you're hoping to purchase.
Because of fractional shares, your pocketbook doesn't restrict you from investing. You can buy the exact same stocks or exchange-traded funds (ETFs) that wealthy Americans do and can make the same percentage gains on your money as investors with much larger portfolio balances.
Of course, if you had to pay a commission to buy stocks, which brokerage firms traditionally required, then it wouldn't make sense to buy small fractions of shares when you have just a few dollars. That brings us to the second change.
Fortunately, most brokerage firms have now eliminated commissions for trading stocks and ETFs. And this has made it easier for everyday Americnas to invest like rich people since you can buy whatever assets you want without worrying about commissions taking all of your returns if you're only investing a few dollars.
No matter how much you have to put into the market, the key to investing in stocks like a rich person is to find a broker offering fractional shares and $0 commissions. You have plenty of great options, and you should take advantage of the fact that it's the first time in history that you can afford to make the same investments as those with millions in the bank.
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