What Tha Finance?!: Fractional Shares
Snatching stock is one of the many ways of how people can build wealth for now and later. Yet, for some looking to jump into the markets, the stock prices can be a bit…. MUCH. I get it and have been there before.
Say for instance you want to grab that share of Amazon, Wal-Mart or Berkshire Hathaway. You research those companies and how they are preforming. Then you add them to your ‘Watch List’ on your brokerage app. Ret-tah-go, right?! Then you stop when you see that stock price! Yikes!!!!
That price that you see for the specific company is well out of reach for your wallet right now. But you still know that you want to grab it at a dope price for long-term growth. So, what does one do?! Snatch that company up via Fractional Shares! While Full Shares are legit what they sound like - market share of the stock you wish you purchase, Fractional Shares allow to you still follow the assignment, but differently.
What to hear me talk about them more? Watch this!
Fractional Shares?! WTF is that!? Fractional Shares come from a type of security or investment called mutual funds. Instead of grabbing a stock for $100 or $1000/share, with certain platforms you can break that down into chunks! This allows you to obtaining ownership bit-by-bit or in fractions until you got all of it! Here is a dope example of doing this:
Say you want to jump in on Tesla. You see that it is pushing over a stack /$1000 a share. You know that Price -Per-Share (PPS) is too much for you right now! With Fractional Shares, you could grab some of Elon’s rocket ship with as little as $5-25 a per Fractional Share (depending on the platform). The ting with Fractional Shares is that the cost of the stock can go up and down, so that value of what you grab it for can change in the blink of an eye. Unfortunately, Fractional Shares doesn’t keep that core price locked in.
These types of stock purchases are what I tell my clients to do all the time! Why?! Here is my logic:
It allows investing to be affordable, not only for the affluent. You can jump in the market with what you are comfortable at. This allows you to grab quality stock without breaking your bank!
It cuts the risk. Many people find investing risky, I used to as well. But being broke is a risk as well. With you purchasing Fractional Shares of a company, you get to learn the stock market while see how that company performs.
The Gain is real. Even if you grab stock within Fractional Shares, you are still up to receive dividends and gains depending on the performance of the fund/company. Capital gains and dividends are key to seeing impact within your portfolio.
As this becomes even more of a trend, apps and brokerages are looking into bring this offering to investors to keep them more motivated to invest! Here are some of the platforms that offer Fractional Shares:
Fractional Shares has effortlessly become one of my favorite ways to watch and weigh in on certain funds before going ‘all in’. Here is proof that you can still see gains within Fractional Shares -
So, don’t be discouraged if you can’t can’t grab a full share of stock or just uncertain about it. This method allows you to build wealth at the same time as paying down debt, stacking cash and staying focused. Research before your reach for your wallet, Fam!
To learn more about WTF: What Tha Finance, check out the introduction post along with other terms discussed so far!
