This brokerage account functionality is essential to my investment strategy
Image source: Getty Images
These days, I’m lucky enough to be able to set aside a decent amount of money each year for investment purposes. But when I was younger and money was tight, I struggled to find funds for my brokerage account. Instead, I was busy stuffing my savings accountand the rest of my money basically went to bills.
But even though I now have more flexibility when it comes to funding my brokerage account, I don’t have unlimited money to invest. That’s why I like to make the most of the funds I To do to have. And a brokerage account feature allows me to do just that.
When diversification is important to you
Maintaining a diversified investment mix is a big part of my strategy. I like to invest in companies from different market sectors. And while some people will tell you that it is not necessary to own more than twenty different stocks, I prefer to own much more than that. And fractional shares make that possible.
Although not all brokerage accounts offer fractional shares, many accounts do today. Fractional shares, as the name suggests, allow you to buy part of a share instead of a full share.
Why would you do this? Say you’re looking to diversify and buy more tech stocks, only the company you really want to own more than any other is trading at $500 a share. You may only have $250 to buy stocks. Without fractional shares, buying those shares would not be an option. But with fractional shares, you can buy half a share if a full share is out of reach.
I will often fall back on fractional shares not because I don’t have the funds to buy a whole stock, but because I don’t have want to to buy a full share. Let’s say there’s a company that’s trading at $1,000 per share and I’m interested in owning it, but I’m not completely sold. I might be willing to risk a $250 investment. But sinking $1,000 into a business I’m uncertain about is another story. In this case, fractional shares give me the best of both worlds – the ability to get out of my comfort zone in a good way without having to commit too much financially.
It pays to diversify
A diversified portfolio could make it easier for you to build great wealth over time. Additionally, having a diversified investment mix could protect you against losses during downturns. stock market volatility – something all investors should assume they will encounter at one time or another.
It is advantageous to consult a brokerage account that offers the possibility of buying fractional shares. They could be your ticket to diversify without taking undue risks. And they also make sure that money – or the lack of it – is not an obstacle to owning a part of the companies you want to invest in.
The best credit card cancels interest
If you have credit card debt, transfer it to this top balance transfer card can let you pay 0% interest for 18 months! It’s one of the reasons why our experts rate this card as a top choice to help you control your debt. This will allow you to pay 0% interest on balance transfers and new purchases during the promotional period, and you will not pay any annual fee.
Read our full review for free and apply in just two minutes.
We are firm believers in the Golden Rule, which is why editorial opinions are our own and have not been previously reviewed, approved or endorsed by the advertisers included. The Ascent does not cover all offers on the market. The editorial content of The Ascent is separate from the editorial content of The Motley Fool and is created by a different team of analysts. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
