Investing is probably one of the best ways of gaining financial freedom. Buying and selling shares have proved to be a viable investment option for many people worldwide. The stock market operates uniquely, requiring some knowledge and technical expertise to make the most out of it.
What are fractional shares?
Simply put, frictional shares are parts of an equity stock that are less than one full share. In other words, fractional shares are options that allow investors to purchase a fraction of a stock share instead of a full share.
In the recent past, there has been an increase in fractional shares, which is attributed to the distinct investment opportunity they present.
If you want to get the most out of the affordable diversification, then learn to purchase stocks with a higher price or try several trading techniques without necessarily putting a lot of money at risk. This is where fractional shares come in.
Below are four steps to get with fractional shares from SoFi:
1. Identify a brokerage offering fractional shares
One of the first steps in getting started with fractional shares is finding a brokerage company offering fractional shares. It was quite challenging to invest in fractional shares in the past simply because there were fewer brokers, and most of them were unreliable.
However, things have drastically changed. According to investment experts from SoFi, “traders today have a wide range of options when it comes to buying fractional shares. But it is important to conduct proper research on your brokerage company of choice.”
2. Deposit a small amount of money
As soon as you have your brokerage account up and running, it is time to deposit some money. The good news is that most brokers no longer operate on the minimum deposit rule. This means that you can deposit as little as $5.
The small investment amount may appear insignificant, but it is always good to start small, and you move ahead. You can decide to invest small amounts whenever you have extra cash. Eventually, you will realize that your investment is slowly growing.
3. Research on stocks you want to invest in
After identifying a brokerage company and depositing funds, the next step is to determine what stock to invest in. This step can be confusing, especially if you are new to the stock market.
The best way is to purchase exchange-traded funds. Most of them can track the performance of the market and help you make informed decisions. If you want to invest in a specific industry like cannabis or robotics, you can opt for thematic EFTs.
4. Use dollar-based investing to buy shares
Lastly, place your order with the brokerage company after identifying the companies or EFTs you prefer to invest in. Buying fractional shares is also referred to as dollar-based investing. This is because you decide on the amount you would like to invest instead of the number of shares.
In a nutshell, fractional shares present an excellent opportunity for investors. Buying fractional shares from SoFi is an opportunity that stock investors should take advantage of.