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Fractional shares refer to a portion or fragment of a whole share of stock. In other words, fractional share investing allows an investor to buy a part of a company's shares or stocks. For instance, if the share price of a company is $100, and an investor only has $50 to invest, fractional share investing allows them to purchase 0.5 shares of the company.
Fractional share investing allows small, retail investors to participate in the stock market with minimal investment, unlike traditional investing that requires buying whole shares.

Fractional share investing has made investing accessible to all types of investors, including the small ones who would not afford whole shares. Today, with as low as $1 or even less, investors can own slices of high-priced stocks such as Amazon and Tesla, among others.

Fractional share investing is an excellent way to diversify your portfolio. Instead of investing all your capital in one share, fractional share investing permits investors to invest in multiple stocks with varying prices, therefore diversifying their portfolio.

Fractional shares are affordable as investors only need to purchase portions or fractions of shares that suit their pocket. This makes it an excellent opportunity for investors who are looking to add new or more stocks to their portfolios but have a limited budget.

Investing in fractional shares can be less risky compared to traditional investing, where investors buy whole shares. With fractional shares, investors can have more control over their portfolios, and there's less chance of losing all their investment capital in a single stock.

Fractional share investing is easy and straightforward. All an investor needs is an investment account and some capital. The process of buying fractional shares is no different from the process of buying whole shares.

Fractional share investing works similarly to traditional investing, whereby investors buy and sell shares through a brokerage. However, the fractional share trading occurs in smaller portions than the whole shares—the investor can name their price for each investment rather than buying whole shares.

For instance, if a company's share costs $100, but an investor only invests $25, the brokerage will purchase a 0.25 share of that company for the investor. Once the investor sells the fractional shares, the broker will transfer the cash earnings into the investor's account.

Investors can purchase fractions of individual stocks such as Amazon, Apple, or Google, among others.

Fractional share investing can also apply when investing in Exchange-Traded Funds (ETFs), which are bundles of different securities. ETFs are designed to track specific indexes, such as the S&P 500.

Investors can also invest in Mutual funds using fractional shares. Mutual funds are slush funds that pool money from multiple investors and invests it in different securities.

One of the most significant risks in fractional share investing is that investors may not receive voting rights, which are typically reserved for whole share investors.

Fractional share investing comes with brokerage fees, which reduce an investor's overall returns. Brokers' fees can range from flat fees per trade to monthly account fees.

Fractional share investing is a new concept and not all brokers offer it.

Fractional share investing is an excellent way to invest in stocks without investing large sums of money. It offers retail investors the chance to invest in top stocks without having to buy a whole share. While fractional share investing may have some drawbacks, it is an accessible way to build a diversified portfolio. Investors looking to invest in fractional shares should conduct thorough research and choose a broker with low commissions and the lowest possible fees.

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