Explained: What are Fractional Shares?
What are Fractional Shares?
A fractional share, as the name suggests, is a fraction or one small portion of a share. If you want to buy one tenth of a share of Tesla, you can now buy with Fractional Shares. In the past Fractional Shares were less common as you could not buy or sell them on the stock market. But now many brokerages and trading platforms, including SoFi, allow you to trade Fractional Shares.
Why should I trade Fractional Shares?
At SoFi, we believe Fractional Shares truly remove the barriers to investing for everyone.
There are some shares that cost hundreds or even thousands of U.S dollars for a single share. For example, one share of Amazon (AMZN) costs over US$3,200 at the time of writing. Not everyone has the finances to be able to buy it.
Fractional Shares allow you to invest the dollar you want into a company. So you can purchase just a US$10 fraction of a share of Amazon (AMZN) instead paying over US$3,200 for a whole share.
So even if you don’t have a lot of money to invest, you can still buy some of the largest and most well known companies on the stock markets.
You can also buy numerous stocks from a wide range of companies and industries for a much smaller amount of money with Fractional Shares. This sort of investment strategy is called diversification which can lower your risk of exposure to market volatility.
So how does it work?
It’s very simple. Fractional Shares work just like normal shares. If you own US$10 worth of Fractional Shares of Amazon (AMZN) and the full share price goes up by 20%, then your US$10 Fractional Shares also goes up by 20%.
Any dividends paid out will be proportional to the Fractional Shares you bought. So if you own half of a share of Amazon, you will get half the dividend payout.
Get started with SoFi!
You can trade some of the largest U.S companies on the stock markets with Fractional Shares. These include Amazon, Google, Netflix, Apple and Nike.
Being an owner of the companies you believe has never been so easy and accessible!
So get started with Fractional Shares with SoFi Hong Kong.
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