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Fractional Share

Fractional shares, also known as fractional ownership or fractional stock, is a division of a single share of stock into smaller, more affordable units. In traditional investing, shares of stock are usually bought and sold as whole units. However, fractional shares enable investors to purchase a portion of a share, allowing them to invest in high-priced stocks without needing to buy a full share.

What You Need To Know

Fractional shares are particularly beneficial for investors with limited funds or those interested in diversifying their portfolio across multiple stocks without large capital requirements. For example, if a single share of a company's stock is worth $1,000, an investor with only $100 could buy 0.1 (1/10th) of a share of that stock.

This concept is made possible through various financial technology platforms and brokerage services that offer fractional investing. These platforms pool investors' money together to buy whole shares, and investors are then allocated fractional shares proportionally based on their contributions.

Fractional shares provide greater accessibility to the stock market, allowing individuals to invest in companies they believe in, regardless of the stock's price per share. It democratizes investing and opens up opportunities for a broader range of people to participate in the financial markets, even with small amounts of capital.