Fractional Shares Investment Strategy. The $100 challenge!
First and foremost we believe that it's important for you to understand how the stock market works prior to making any investment decision. Understand that there are risks involved and only to use money that you don't absolutely need.
With that being said, welcome to Wall Street! It might seem confusing and intimidating but we're here to help you along the way!
What are fractional shares?
To understand how fractional shares work, it helps to know how a stock works. When an investor buys a share of a company’s stock, they are buying ownership in that publicly-traded company. This is why stocks are also called equities, because investors own equity in that company. Stocks are sold in parcels called “shares,” and owners are often referred to as shareholders. Therefore, a fractional share is some fraction—or portion—of one share of a stock.
With fractional shares, investors can buy stock without having to purchase the entire share. Instead, the investor uses whatever dollar amount they have to invest. For example, someone with $200 to invest, but wants to buy a stock trading at $1,000, could simply invest the $200, buying a 0.2 fractional share.
What is the best strategy for beginners?
We believe that fractional shares has become an absolute game changer for beginners. Most first time investors prefer to buy stocks that are trading under $5 a share. That pretty much eliminates most of the greatest companies on the stock market. With fractional shares you can invest $5 worth of a $2,000 blue chip stock that you'd otherwise have to pass up.
We've developed a strategy that will allow you to create a collection of stocks using $100!
Take the $100 challenge!
First, pick 10 companies that you absolutely love. It doesn't matter what the price of the stock is. All that matters is that the company is something you understand and believe in the future of.
Next, invest $10 in each of those stocks for a total of $100.
Wait a couple of weeks and revisit your 10 stocks. Some of them might have went up and some of them might have went down. Catch up on the news for each company to see why they stock might have gone the direction that it did. If it went down, most likely there's no need to panic. Think of it as an opportunity to buy more at a cheaper price and add $5 more to your biggest loser!
Adding $5 here and $10 there has many advantages. First, you'll be lowering your overall average on the stock. You'll also be less likely to sell for a loss if you're actually excited to buy more at a cheaper price.