Have you ever thought about purchasing fractional shares? The number of investment opportunities for individuals is growing, and with this in mind, more and more people have been turning to fractional shares as a valuable investment opportunity. But what are fractional shares, and could they offer a lucrative opportunity for your own investing needs?
Today, we’ll be taking a look at how investing in fractional shares could offer a valuable opportunity overall; hopefully, this will help you find a suitable solution for your own investment needs.
What is a Fractional Share?
First of all, we need to start by considering what a fractional share actually is. Fortunately, this is a very simple concept to define.
A fractional share, as the name might suggest, is simply a portion of a share. In other words, when investing in fractional shares, you might just purchase a half, a quarter, or even an eighth of a share in a business, rather than purchasing a full share.
Of course, the price for shares will vary from business to business; as explained by ThisIsMoney, a small national company, for example, will almost certainly have a lower share price than a massive multinational such as Facebook or Amazon (whose shares can easily cost thousands of dollars each). Nevertheless, with a fractional share model, investors can enjoy far greater freedom over their investments.
The Benefits of Investing in Fractional Shares
There are many benefits of investing in fractional shares. And while we can’t realistically cover every single benefit of fractional shares in one short article, we have summarised several of the most notable benefits of fractional shares as follows to help you find out more.
#1 It Allows Smaller Investments
The most apparent benefit of fractional shares is simple: it allows investors to make smaller investments. After all, many investors are either unwilling or unable to pledge thousands to invest in a single share; however, with fractional investments, the price of investing can be cut to a much more manageable level.
#2 Fractional Shares Give Investors New Opportunities
If you’ve always dreamed of investing in big businesses but haven’t previously been able to justify it, fractional shares might be just the solution you need. Indeed, fractional shares offer countless new opportunities for investors, allowing you to invest in businesses you’d never have before dreamed of. What’s more, they make it possible to build a wide investment portfolio, rather than just investing in one or two businesses.
#3 You Still Receive Dividends
One common concern investors have with fractional shares is whether they’ll still be entitled to their dividends. Fortunately, this isn’t a major point of concern, and fractional shares still pay dividends in line with the value of your share. As such, if you owned one-quarter of a share, and a £10 dividend was paid out, you’d receive one quarter: in other words, your dividend would be £2.50.
#4 Ability to Spread Risk
Have you ever heard the saying, “don’t put all your eggs in one basket?” This is a concept that’s often applied with investments, too. Indeed, when you put all of your money behind a single share, you could enjoy massive gains – but you could also lose everything. It’s a massive risk, in short, to invest in just one share. And while there’s never any guarantee that you’ll make money when investing in stocks and shares, it still remains clear that there are ways to make an investment less risky overall.
As such, it’s often a common method to spread your risk by investing in countless different companies and models; as such, if one investment loses money, you theoretically won’t lose as much since the other investments still have the chance to pay.
#5 There are Countless Investment Platforms You Could Consider
As a final benefit, it’s definitely worth pointing out that fractional investments are available through countless different investment platforms.
As such, if you have been hoping to invest in fractional shares, you won’t have to settle for just one or two platforms offering the service at an extremely high markup. Instead, there are numerous different fractional shares investment platforms that can allow you to invest in stocks and shares, and this could be an excellent option to consider overall. However, before choosing a trading platform, always ensure you’ve done your research first to prevent overpaying for an otherwise comparable service that could be much cheaper with other trading platforms.
If you’d like to find out more about the different opportunities available to you, now could be as good a time as any. And, while there’s never any guarantee that an investment will definitely lead to a profit, investing in fractional shares can offer a far more practical and affordable investment opportunity overall. What’s more, they can also allow investors to spread the risk of their investments, rather than putting all their eggs in one basket – potentially a valuable opportunity indeed.
Produced in association with Admiral Markets