All the world has been discussing partial stock buying (also known as fractional share investing) and how it makes investing easily accessible to millions of Americans. While many understand that buying a partial stock means you do not get the full value of the stock, most people aren’t totally sure of what is going on. Investing is something every household should be doing and before you jump onto the partial stock bandwagon, let’s dive into how these things work and how to get started.
You Are Not Buying From NYSE
The New York Stock Exchange (among others) is where many stocks are purchases. However, they require purchases of full stock and that can get expensive. Some companies have stock that is worth well over a thousand dollars. The affordable stocks are companies that are brand new and it’s unclear if they will become a mainstay in the stock exchange. It gets scary really fast. Fortunately, there are brokerage firms who understand these fears and have changed the investing game entirely.
You Are Buying From The Brokerage Firm
These brokerage firms decided that they would buy stock and then sell partial shares to individuals who want to get in on the investing game. Stockpile is a very popular online brokerage firm that has made a lot of headway with partial stock investing. With just as little as $5, they will sell a percentage of stock.
You can keep investing your money over time and work towards owning a full share of a company you really love. You can receive dividends and sell your stock just as you would if you had full shares, all within the brokerage firm.
You Can Learn As You Go
The easiest way to learn about stock investing is a little trial and error. Buying full stock at $1,000 will make you hesitant to learn from trial and error. With partial stock, there is less fear and you can learn a lot as you go. Almost everyone starts out buying partial stock with companies that they already support.
For instance, I invested money in Sephora because I shop regularly with the company. However, as you go along you will start to notice trends with your stock and you can make choices about what to do with it. I ended up selling my partials of Sephora (at a loss) and moving the money into Netflix where it grew much better.
Because my investment was small and my loss was equally small, it didn’t hurt to lose that money. I felt more empowered by my ability to make decisions based on how my partial stock performed as time passed on.
Watch The Fees
One thing you will notice is that every brokerage firm charge fees for purchases, trades, and payouts. Others will charge fees if you do not have a minimum amount in your account or a monthly service fee. You want to find one that charges the least and try to eliminate all fees if possible.
Another thing to look for, and it’s one thing I love about Stockpile, are the brokerage firms that allow others to gift you partial stock. Rather than getting a bunch of gift cards for a birthday, friends and family being able to buy me partial stocks is very attractive. It’s an easy way to grow your investment and it’s not so expensive that family and friends can afford to add to that portfolio. It’s a gift that keeps on giving!
Read More:
Basic Rules Every Beginner Should Know About Investing
Tips For Saving For Retirement
