Fractional Shares 101
The impact of inflation today cannot be denied. This is why a lot of investors are seeking new ways to grow their wealth. Because stock can be incredibly expensive for beginner investors, especially young ones, many people have turned to fractional shares as a means to grow their wealth and keep up with inflation.
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In many ways, fractional shares do wonders to make the stock market more approachable and accessible to investors from all walks of life. Through this investment vehicle, you can easily and affordably diversify your portfolio since you wouldn’t need thousands of dollars to invest in pricey stocks like Chipotle Singapore. Instead, you can own a slice of the pie at a price that suits your budget.
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If you are curious about how to invest in fractional shares in Singapore, you’re on the right page. This guide will discuss everything you need to know about it.
Here at OMY Singapore, you will discover the following:
Fractional shares are less than a full share of the equity. So instead of owning a total share of a particular stock, you only own a partial one and its value is based on its relation to the whole-share value.
Think about it this way, if you are interested in a stock that has a share price of S$1,000 but you only shave S$200, you can still purchase one-fifth of that share as long as the broker you use offers fractional shares. However, keep in mind that different brokers have varying rules about the minimum portion of shares you can purchase.
By now, you may be wondering how fractional shares work.
When you have a fraction of a share, your investment will be treated similarly to a full share which means that you can enjoy the same gains and benefits as those who own the full stock. On the flip side, you also take on the risk of loss.
Here are the top benefits of investing in fractional shares.
You can get dividends
Dividends are paid out on this type of share if the stock you purchased pays dividends. Keep in mind that the dividend you will receive will be relative to the number of shares you own. Dividends are also extremely advantageous, especially when it comes to passive income and compound interest.
It allows you to diversify your portfolio
Fractional shares help you diversify your portfolio since you won’t need to place all your eggs in one basket. For instance, it would be safer if you spread out your money across the stock market instead of simply putting all your money in one stock. If you only buy a full share and the stock declines in value, then you’ll significantly lose the majority of your money.
You can invest depending on your budget
Perhaps the biggest benefit you can get from fractional shares is it will open a lot of opportunities and doors that are unavailable for those who don’t have a huge budget. If not for this investment vehicle, stocks would become out of reach for millions of investors.
While fractional shares have a lot of advantages, they also come with some disadvantages. Here are some of them:
Not all brokers offer this investment
As an investor interested in fractional shares, you should be aware that not all brokers offer this type of investment. Therefore, you need to do your research and choose a suitable broker that offers fractional shares. You should also check if the broker charges a fee for this type of investment.
You may miss out on dividends
As with any investment, there are risks involved in fractional shares. To add to that, investing in fractional shares may cause you to miss out on dividends if you don’t own a full share.
It’s easy to be reckless with your money
Many people might be tempted to invest without fully understanding the risks involved. It’s easy for beginners to be reckless with their money and invest in stocks that they don’t fully understand, which can lead to significant losses.
Although the steps may differ depending on your platform of choice, here’s how you can be an SGX share investor.
Step 1: Open an account
First, choose a firm that allows you to buy fractional shares.
Step 2: Deposit funds
Once you’ve opened your account, you can start buying shares immediately. Keep in mind that some platforms need a 3-5 days clearing time for deposits.
Step 3: Research stocks before buying them
Not all brokerage firms offer the same suite of fractional shares. Make sure the ones you want to buy are offered by your platform of choice.
Step 4: Start investing
Brokerage firms allow you to invest based on the number of shares, or based by dollar amount.
Where to Buy Stocks in Singapore
Take a look at where you can buy fractional shares in Singapore.
With its S$0 commission trading and fractional shares, Robinhood stands out as a trading platform in the country. It’s also very easy to get started, and you don’t need to worry about a minimum deposit.
Syfe Trade is one of the best trading app in Singapore. Here, you can do free trades each month, and enjoy low brokerage commission fees thereafter at only S$1.49 per trade.
For those buying less than a whole share, Tiger Brokers offers no commission to help you save. This platform only charges a 1% platform fee capped at S$1. Considering this, it’s a good option for those who want to invest less than US$100.
With its S$1 per trade fee (maximum of 1% per trade) it’s no wonder why many people head over to this platform to invest in fractional shares.
This platform does not have any platform or brokerage commission fee at the moment so you only need to pay for the shares you’re buying. However, you need at least S$5 to invest.
This is an investment app in Singapore that highlights fractional investing for as little as S$0.01. You can purchase ETFs, stocks, and bonds.
SoFi Invest has a suite of apps to help beginner investors with their SoFi bits fractional shares. SoFi Invest also offers debit cards, credit management, savings and checking accounts, and many more.
This is one of the most popular platforms in Singapore that offers a suite of tools to help investors get fractional shares. They also have an AI-powered robo advisor to help budding investors manage their accounts and pick better investments.
One of the best things about fractional shares is you can invest in companies you already know. Therefore, you may already have trust in these companies, which gives you more peace of mind that it’s good value for your money. We’ve rounded up some of the stocks you can invest in Singapore.
- Chipotle Mexican Grill
- Walt Disney Company
A Word from OMY
Fractional shares are definitely one of the best ways beginners can ease into the stock market based on their budget and terms. With fractional investment, stocks of companies that are out of your price range can easily diversify their investment. Now that you know how to invest in fractional shares in Singapore, you can finally grow your investment portfolio.
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