What Are Fractional Shares and Their Benefits?

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Most brokerage firms and trading platforms now allow you to invest in fractional shares. You can start investing with as little as Rs.1 in the stocks and start building a diversified portfolio.

Fractional investing allows you to invest a small amount of money in expensive securities which are otherwise out of reach. This gives the investors a broader set of investment opportunities and builds a diversified portfolio with limited capital.

Fractional investing is also called dollar-based investing.

Benefits of fractional shares

The benefits of fractional trading are as follows:

Fractional shares as the name suggests are a fraction of the full share. As fractional share is a part/fraction of a full share it allows you to invest small amounts. For example, if the value of the share of a company is $1000 then fractional share trading will let you invest as little as $10 which is 1% of a share.

Fractional trading allows conservative investors to enter the market with limited risk. With the help of fractional investing investors can invest in the shares of companies like Amazon, Tesla, Netflix, Google and more. It would otherwise cost hundreds of dollars. Fractional investing makes it convenient for seasoned and new investors to invest in favoured stocks.

You get voting rights on the full shares but you do not get voting rights on fractional shares. The dividends are distributed proportionally to the fractional shares you own.