When You Don't Have A Lot Of Money, Here's How To Invest In Expensive Stocks

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When You Don't Have A Lot Of Money, Here's How To Invest In Expensive Stocks
31 Aug 2021
5 min read

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Assume you only have a few hundred dollars to invest and wish to acquire stock in a major corporation such as Amazon or Google. A single stake in one of these companies can cost thousands of dollars, which is a travesty. They let you to buy only a small portion of a company's shares for a fraction of the price of the full stock.#ThinkWithNiche.

Investing in fractional shares is a simple procedure. A fractional share is any portion of a publicly traded company or ETF that is less than a complete share. They can only be obtained through a broker, who may charge a fee for the service (Bankrate has a good list of recommended brokers here). If you appreciate a company's fundamentals but can't afford to buy the entire stock, you can acquire fractional shares. Warren Buffet's Berkshire Hathaway, which is currently valued at $430,00, is an outstanding example. There are numerous advantages to investing in fractional shares.

  • Blue-chip stocks are becoming more widely available. Profit from easier access to popular equities that have consistently outperformed over time by purchasing fractional shares.
  • Diversifying your portfolio on a shoestring budget Even if you don't have a lot of money, you may diversify your stock portfolio using fractional shares. If you choose, you may put more money into a broader selection of tech companies, for example, or adjust your risk tolerance.
  • You may invest your money all the way down to the last cent: Because you are not bound to the exact price of the equities you are acquiring; it is much easier to invest a specific amount of money each month with fractional shares.

There are certain disadvantages to investing in fractional shares.

  • There are only a few options available: In addition to providing, you with access to a broader choice of shares, some brokerages limit the sorts of companies in which you can invest. This, however, is dependent on the brokerage you select.
  • They're a little more difficult to market. It is more difficult to sell fractional shares than whole shares, and you are unlikely to be able to transfer them between brokers.
  • Depending on the stocks, investing in fractional shares may motivate you to engage in short-term trading. This approach, which is riskier than passive investment, necessitates active management.
  • Because fractional shares encourage more trading for less money, you may end up paying a higher proportion of transaction costs on each transaction.

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