How to Buy Stocks At Half the Price - or Lower!
Have you ever wanted to buy stocks but the prices were way too high and you just couldn’t afford it? Well, it’s easier now than ever before to not only buy those same stocks but you can actually afford to buy them with what you have. In essence, you can literally buy fractional shares.
It wasn't always that way. Historically, Wall Street catered to rich investors. If you couldn't afford to buy round lots of 100 shares of stock, some brokers didn't really want to deal with you. That meant coming up with $5,000, $10,000, or even more just to buy a single stock.
The rise of discount brokers improved things for small investors, making so-called (odd-lot investing) of less than 100 shares more common. Yet even then, investors faced another challenge: skyrocketing share prices that meant you'd sometimes need hundreds or even thousands of dollars just to buy a single share of certain stocks.
Tesla or Apple Stock
Take Tesla (TSLA) for example. As of this article, it costs about $653 per share to purchase this stock. So, if you only had $100 to invest at the moment, you’ll be able to buy 0.153 shares (653/100 = 0.153) - less than 1 share) of Tesla stock. $325 will get you 0.497 shares ($325/4653). Do you see how this works? For clarity, let's take a look at another example. Many people love Apple products. Apple (AAPL) stock is trading around $145 per share. If you had only $50 to invest today, you will be able to pick up 0.344 shares of Apple stock ($50/$145). Can you see the opportunities to purchase quality stocks without coming up with the full price.
What Fractional Shares Let You Do
Today, you don't have to wait to invest. If you have $100 a month to put to work and you want to buy a $2,000 stock, you can buy 1/20th of a share this month, 1/20th next month, and so on until you get to your final goal.
The nice thing with fractional shares is that along the way, you get to be a shareholder. If the stock goes up, the value of your fractional share goes up. If it drops, the value will go down — but your next investment will come at a cheaper price, assuming you're committed to making regular investments month in and month out.
With fractional shares, it's also far easier to invest in a diversified portfolio comprising many stocks. If you have $1,000 to invest and you want to buy 10 different stocks, you can just tell your broker to invest $100 in each of the 10 stocks.
Not that long along, you could have only been permitted to purchase 1 share of Tesla with $1,000 at a price $653. A $1000 investment in the Apple stock example above will net you approximately 6.8 shares of that stock at $145 per share.
Use Fractional Shares to Your Advantage
The point is, it could me more to your advantage buying fractional shares of 10 different stocks than purchasing one or two shares of a more expensive stock.
So be sure to take advantage of fractional shares. They're a huge equalizer for small investors, opening doors to Wall Street that used to be firmly shut. Used well, fractional shares can dramatically improve your investment results.