Fractional Shares

Fractional Shares

Fractional Shares are portions of a whole Share of a Stock or mutual fund. They allow investors to buy or sell a fraction of a Share rather than a full Share, making it easier to invest in high-priced Stocks with smaller amounts of Money.

Examples

  • If a single Share of a company costs $1,000, an investor could buy 0.5 Shares for $500.
  • A mutual fund with a Share price of $200 can be purchased in fractions, such as 0.25 Shares for $50.

Cases

Fractional Shares are commonly used in the following cases:

  • Dollar-Cost Averaging: Investors can regularly invest fixed amounts, acquiring fractional Shares over time.
  • Access to High-Value Stocks: Retail Investors can diversify their portfolios by Investing in expensive Stocks like Amazon or Google without needing significant Capital.
  • Dividend REINvestment Plans (DRIPs): Investors can rEINvest dividends to purchase fractional Shares, enhancing their investment without additional cash outlay.