• Thu. May 23rd, 2024

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5 Reasons You Could Consider Investing in Fractional Shares


Have you ever thought about investing in fractional shares? Fractional shares are rapidly becoming more popular from an investment perspective, and with this in mind, it’s definitely an interesting and valuable point to consider. However, to get the most from your investment goals, you naturally need to consider the different options available to you – which is why we have come up with five key reasons you could consider investing in fractional shares (and whether this could be the right option for you).

Investing in Fractional Shares: 5 Key Reasons You Could Consider Them

Ever considered investing in fractional shares for your own investment goals? There are countless potential benefits of investing in fractional shares over traditional approaches, and we have summarised a few points as follows. After all, while fractional share investing can never guarantee a profitable return, there are definitely perks that can make them a promising investment opportunity to consider for any disposable income you might have.

#1 They’re More Affordable to Purchase

Big companies such as Amazon have massive price tags for shares; in fact, many shares in Amazon can easily fall around £2000 to £3000. Of course, this is far outside of the bracket for many people, who may only be able to afford to invest a smaller sum of money – for example, £200. However, fractional shares are much more affordable to purchase than a full share, meaning you could buy 10% of a share in Amazon for a far lower price.

#2 They Help Spread Risk

Let’s say you had £1000 to invest, and you purchased a single share in a big business for £1000. Then, imagine that the business’s market suffered a significant blow, and the value of your share plummeted to a mere £200. You’d have lost £800, potentially overnight!

However, if you invested in ten fractional shares instead, each valued at £100, and one company suffered this blow, you’d stand to lose £80 rather than £800. Meanwhile, the other investments may still continue earning money.

Though it’s not a risk-free investment opportunity, fractional investments can be much more affordable overall.

#3 Fractional Shares are Becoming More Common

Another benefit that’s worth considering is pretty simple: fractional shares are becoming far more common in this day and age. Indeed, though they’re only a relatively new principle, they’ve rapidly grown in popularity over the last few years, and now more people than ever before are investing in fractional shares.

As someone looking to invest in fractional shares, what does this mean for you? Well, it means that there are more opportunities than ever before. A growing number of fractional shares investment platforms are now available since there are more investors to split the shares between. As such, this is definitely a leading reason to consider investing in fractional shares, offering far greater opportunities for your own investment needs.

#4 You Can Invest in New Businesses You’d Never Have Been Able to Before

As a small or medium-scale investor, big businesses were probably off the table for your investment needs. After all, if a business’s share price is in the thousands as standard, you’d need a very large sum of money lying around to justify investing in these.

However, with fractional shares, you can suddenly consider investing in businesses that you’d never have been able to before. Firms such as Amazon, Facebook, and other massive names suddenly aren’t restricted to just the ultra-rich investors; instead, there are now new opportunities for investors of all financial backgrounds to invest.

#5 You Still Receive Dividends on Your Shares

As a final benefit, you won’t have to sacrifice your earning opportunity when investing in fractional shares for the simple reason that you still receive dividends. Indeed, while you won’t receive the full dividend paid out to shareholders, you will receive a fraction of the dividend in line with the value of your share. For example, as explained by The Motley Fool, if you owned half of a share, you would also receive half of the dividend paid out for that share.

Are Fractional Investments Right for Me?

Are fractional investments the right option for you? There’s no simple way to answer that question. However, when you partner with a reputable and reliable online trade broker for fractional shares, there are definitely perks that could make it a good opportunity to consider. And, if you have a smaller budget to invest in shares, these benefits may often be all the more pronounced.

Final Thoughts

There are numerous different investment opportunities available these days, and with this in mind, you may want to consider investing in fractional shares as part of your decision. However, while fractional shares can often provide a valuable opportunity for many investors, they may not be the single most effective solution in every scenario; as such, we highly recommend you consider your personal financial situation to ensure that your fractional shares investment doesn’t leave you in trouble elsewhere.