While investing in a US blue-chip company seems exciting, the prices of these shares can damper your plans. With fractional shares, you can stake out a part of the FAANG stocks and diversify your portfolio.
The meaning of fractional shares is simple: investors purchase a part or portion of a single share instead of the whole share. This makes the investment affordable while also allowing you to build your portfolio and make the most of your investment.
While less than a full share, fractional shares work like whole shares bringing you the same percentage of gains or losses as whole shares. You are also entitled to dividend payments from fractional shares. However, these dividends will be proportional to the invested amount.
Let’s say the XYZ blue-chip stock is trading for $200. You have $100, so buying a whole share is not possible. Instead, spending $20, you purchase 1/10 of a XYZ share with fractional investing. If the share’s price rises by 5% to $210, your holding will also grow by 5% to $22.05. Similarly, if the dividend declared is $5/share, you will be entitled to a payout of $0.5 on each share.
While you cannot buy fractional shares in India, a few platforms like Stockal and Fi Money offer this service for US stock investments. If you wish to buy fractional shares from India, here’s how to go about it:
Very few online brokerage platforms and firms with foreign ties offer fractional investment. Research the options available and then take a call.
The online KYC process is pretty straightforward. Keep documents, like your PAN Card, handy for upload and verification.
The verification usually takes about a day or two, and once done, you can start depositing funds into the account.
Currently, most brokerage firms offering investment in fractional shares have a limited list of companies. However, most include the big-tech FAANG companies and major US players.
Decide on the investment amount, keeping the conversion rate and fees in mind.
Fractional shares are a boon for most investors and serve as a great way to ease into the US stock market. With this investment option, you can own shares of companies that would otherwise be beyond your affordability threshold. Not just that, it also helps diversify your portfolio instead of spending the majority of it on a single stock.
With Fi Money, you can start investing in fractional shares from as little as $5, that too, without any brokerage charges. From Apple and Microsoft to Netflix and Uber, you can stake out a part of the top US companies with Fi’s fractional investment feature. All you have to do is create a paperless account in minutes and start investing in record time.
No. Fractional shares don’t trade openly on the NYSE. To buy or sell them, you will have to go through a brokerage firm that offers this service. Through these brokerage firms, you can buy fractional shares of select stocks listed on the NYSE.
In the US, fractional investing refers to the act of buying a portion or part of a whole share. This dollar-amount-based investing strategy is popular among investors, allowing them to invest in top companies without toeing the budget line.
No. As of now, India does not allow fractional shares. However, few online investment platforms allow Indian investors to own fractional US shares.