scorecardresearchWhat is fractional investing and how to start it?

What is fractional investing and how to start it?

Updated: 27 Apr 2023, 12:30 PM IST
TL;DR.

High value investing was not everyone’s cup of tea, which is not the case now. All thanks to fractional investing. In this article, we will understand everything about innovative ways to invest.

Fractional investing, also known as micro-investing.

Fractional investing, also known as micro-investing.

There are a few stocks that are highly priced in India that retail investors could afford to buy, but at the same time, those stocks are fundamentally strong enough to give decent returns and help to create wealth. Since the stock market always takes steps ahead to serve you the best, it comes up with an innovative way of investing in highly priced stocks.

Fractional investing helps you in buying stocks in a fraction of the company’ stocks, which increases the affordability to buy fundamentally strong stocks in small portions and avail benefits proportionately.

Let’s dive deeper into fractional investing-

What is fractional investing?

Fractional investing, also known as micro-investing, has been gaining traction in India in recent years as a new way of investing that allows individuals to buy a fraction of a share of a company's stock, rather than buying a full share. it allows investors to own shares in high-priced companies that they may not have been able to afford otherwise.

You can buy fractional shares through various online brokerage platforms. They offer fractional shares in real-time, allowing investors to buy and sell them just like traditional stocks. The value of a fractional share is determined by the current market value of the full share, and investors can benefit from any gains or losses in the price of the stock.

READ MORE: MintGenie Explains: What are fractional shares?

How to start fractional investing?

Here is simple steps you need to follow to start through fractional approach-

  1. Choose a brokerage platform: Investors can choose from several online brokerage platforms in India, which offer fractional shares in real-time.
  2. Select a stock: Investors can select the stock they want to invest in and determine the amount they want to invest.
  3. Buy fractional shares: Investors can buy fractional shares in the selected stock. The value of a fractional share is determined by the current market value of the full share. For example, if the market value of one share is INR 10,000, an investor can buy a fraction of that share, such as 0.1 or 0.01, depending on the brokerage platform.
  4. Keep a track of your investment-No matter which approaches you are following to start investing, it is always better to keep track of your investments which align with your financial goal as well. If you feel that your objectives cannot be fulfilled by keeping investing in the same stock, you can rebalance your portfolio anytime by selling those shares through brokerage firms.

Conclusion

However, not all companies offer fractional shares as it is relatively a new concept in India and some brokerage platforms too have restrictions on which stocks are available for fractional investing. It's important for you to carefully consider the potential risks and rewards of fractional investing before deciding if it's the right approach for your investment goals.

Anushka Trivedi is a freelance financial content writer. She can be reached at anushkatrivedi.com

Disclaimer: This story is for informational purposes only. Please speak to a SEBI-registered investment advisor before making any investment-related decision.

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New-time investors must know all the options they have before investing.
First Published: 27 Apr 2023, 12:30 PM IST