Why you should invest through fractional shares.

Key points:

🔑 Great for consistent dollar-cost-averaging.

🔑 Great for average income earners, who are interested in purchasing stocks which are expensive.

🔑 Allow investors to buy as little as $1 worth of shares.



 

Disparity of outcome of investing through fractional shares vs through whole shares.


Here is a scenario:

  • Assume stock price will increase at 20% per year

  • stock price at start of period is $1,000

  • you are able to save $300 per month for investments


  • this is the difference between the outcome if you buy the shares fractionally vs through whole share.

Difference of outcome from investing through fractional vs whole shares
Difference of outcome from investing through fractional vs whole shares

Benefits of investing through fractional shares are clear:


You will have:

  • 👍🏻 higher number of shares owned.

  • 👍🏻 resulting in more dividends received (if the stock pays out dividends)

  • 👍🏻 purchased them all at a lower average price.

  • 👍🏻 achieve higher returns over the same period.

  • 👍🏻 not to mention that the differences compounded over a longer the period of time (in 5, 10 or 20 years) will make an even more significant difference!


Fractional shares are:

  • 👍🏻 Also great when performing asset rebalancing

  • 👍🏻 you can just sell as many as you need, instead of whole share.



 

Which brokerages provide fractional shares trading?


If you are based in Singapore or Malaysia,

there are not many options available out there as of now.


Personally, I would highly recommend using Interactive Brokers,

as I have been a satisfied client myself for the past 2 years (after using more than 5 different brokerages).


If you would like to open an account,

why not use my referral code?


by clicking this link here:

https://ibkr.com/referral/karkheng249


  • by doing so you will receive $1,000 worth of shares from interactive brokers for free.

  • and I will receive $200 for referral fee,

  • which I will be happy to use a portion of it to treat you coffee ☕.

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