The "Fractional" strategy

Fractional investing is a type of investing where you can buy and own a fraction, or a portion, of a share of a stock or ETF (exchange-traded fund) instead of buying the full share. This allows investors to invest smaller amounts of money into high-priced stocks or ETFs that they might not be able to afford otherwise. For example, if a share of stock costs $1000, and you only have $100 to invest, you could use fractional investing to purchase a 10% share of the stock. This would allow you to own a portion of the stock, and benefit from any price changes in proportion to your ownership percentage. Fractional investing can be beneficial for beginner investors for several reasons:

1. Lower entry point: Fractional investing allows beginner investors to invest in high-priced stocks or ETFs with a smaller amount of money. This can help them build a diversified portfolio even with limited funds.

2. Reduced risk: Fractional investing allows investors to diversify their portfolio with smaller investments in multiple stocks or ETFs. This can help reduce the overall risk of their portfolio by spreading their investments across multiple assets.

3. Accessibility: Fractional investing platforms are easy to use and accessible to anyone with a smartphone or computer. This makes it easier for beginner investors to start investing and learn about the market.

4. Flexibility: Fractional investing allows investors to invest any amount of money they want, making it easy to start small and gradually increase their investments as they become more comfortable with the market.

Overall, fractional investing can be a useful tool for beginner investors who want to start investing in the stock market but have limited funds or are not comfortable with investing large sums of money. It allows them to build a diversified portfolio, reduce risk, and gain exposure to high-priced stocks or ETFs that they might not be able to afford otherwise.

Many well-known investors and investment companies have embraced fractional investing as a way to make investing more accessible to a wider audience. Here are a few examples:

1. Warren Buffett - In 2020, Warren Buffett's company, Berkshire Hathaway, announced that it would allow fractional investing through its stock trading platform.

2. Charles Schwab - The investment firm Charles Schwab launched its fractional investing platform, Schwab Stock Slices, in 2019.

3. Fidelity Investments - Fidelity Investments offers fractional share trading through its Fidelity Mobile app.

4. Robinhood - The popular trading app Robinhood allows users to buy and sell fractional shares of stocks and ETFs.

5. Square - In 2020, the payment processing company Square announced that it would allow users of its Cash App to buy and sell fractional shares of stocks.

6. Acorns - The investing app Acorns offers a feature called "Round-Ups," which rounds up users' purchases to the nearest dollar and invests the difference in a diversified portfolio of ETFs.