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TAKEAWAY
• Fractional shares are parts of whole shares.
• Some investors seek fractional shares as an alternative to buying whole shares.
• At Goldstone, investors can buy fractional shares of stocks and exchange-traded funds (ETFs) with as little as $1.
• Stocks with a value greater than $1.00 per share and a market capitalization greater than $25 million are eligible for fractional shares on Goldstone.
To invest in the stock market, you don’t have to have millions, thousands or even hundreds of dollars to get started. Even if you only have a dollar more, you can start building your portfolio. Here’s how:
By buying fractional shares, investors don’t have to rely on being able to afford whole stocks. Instead, they can buy just a small portion of their favorite companies or funds (a mix of several stocks or other securities). This is now possible directly through several financial service providers, including GSAU.
So what’s a fractional share?
A fractional share is like a component of a spaceship…
If a share in a company or fund is like a spaceship, a fraction of a share could be like a component of the machine. Not everyone wants or can afford the whole spaceship, but it can be broken down into smaller parts – doors, gears, seats, oxygen tanks, and jet engines. Just as an aerospace engineer appreciates the integral role of each individual screw, you, as an investor, can participate in something bigger.
There are many ways an investor can use fractional shares in their portfolio, even if that means investing only a handful of spare change. Before we head into the stratosphere, let’s do a quick check with Mission Control.
Fractional Shares Explained
A fractional share is a tiny stake in a company or exchange-traded fund (also called an ETF). Rather than requiring investors to buy a whole share (these are sometimes quite expensive), fractional shares allow investors to buy smaller shares. This levels the playing field and ensures that investors have access to the same opportunities at the same time.
It wasn’t always this way. For a long time, retail investors who couldn’t afford full shares in their favorite companies or funds had to wait and save until they could buy a full share, which could cost hundreds or thousands of dollars. In the meantime, stock prices could rise, and these retail investors may have missed an investment opportunity. Now, however, investors can get in earlier and access a wide range of individual stocks and exchange-traded funds even on a small budget.
Nuts and Bolts: A Wide Range of Individual Stocks
When you buy fractions of a stock, you can experience proportionately the risks and rewards you’d have if you’d bought a whole stock. At Goldstone, you can trade fractional shares in real time, meaning trades made during market hours are processed immediately. Of course, trading fractional shares is commission-free, just like trading whole shares at Goldstone.
You also have great flexibility in the size of shares you can buy – they can be as small as one millionth (1/1,000,000) of a share. Even if a stock costs a few thousand dollars apiece, you can own a fractional share for $1. Not all investments are suitable for fractional ownership. But stocks that are worth more than $1 per share and have a market capitalization of more than $25 million are eligible for fractional shares at Goldstone. (If a stock isn’t supported, we’ll let you know when you place your order). On the Goldstone app, the purchase process is customizable, meaning you can trade shares in either dollar amounts (e.g., $5 worth of Spaceship Enterprises shares) or share amounts (e.g., 0.002 Spaceship Enterprises shares), with an investment of as little as $1.
Fractional shares can sometimes be of interest to investors who’ve income but haven’t yet looked into selecting their own shares. Some investors may prefer to start with a small amount of money and spread it over several companies or funds as a way to get started in developing their own trading style and balanced portfolio.