There are a few ways to invest in partial stocks, but they are sometimes easy. First, you should consider buying fractional shares (also known as DRIPs). If your broker offers them, this can be a great way to buy partial stocks.
Some apps buy fractional shares so that you don’t have to think about it yourself—which might be more cost-effective for smaller purchases. If those don’t work for you, mutual funds or exchange-traded funds may be better options since they have lower minimum investment requirements than individual stocks do.
Consider a DRIP
Another strategy is to invest in a dividend reinvestment plan (DRIP).
A DRIP allows you to buy partial stocks because it automatically reinvests your company’s dividends without charging any commissions. The only drawback is that they are not available for all companies, and some may have restrictions on how often you can buy or sell shares.
You can set up a DRIP online through your brokerage firm or with the company itself. It’s important to check whether there are any fees associated with setting up this account and any limitations on how often you can trade shares within it. Some plans also require an initial investment before allowing further purchases of stock through them; others require verification documents such as proof of identity and income tax returns before establishing an account.
Find a broker that offers fractional shares
You’ll need to do some research to find a broker that offers fractional shares. One way to start is by visiting the website of your local stock exchange and looking at the list of members. You should see several companies listed with “ADR” after their names, which stands for American Depositary Receipts.
If you can identify at least one company whose stock trades on your local exchange offering fractional shares, contact them directly and ask if they can help you place orders for less than one share at a time.
Check out an app that buys fractional shares
Another option is to use an app that buys fractional shares of stocks. You can get started with Stash, which is free and allows you to invest as little as $5. It lets you buy fractional shares of companies like Apple, Amazon and Facebook—even if their stock price rises or falls by a small amount each day; your holdings are updated accordingly.
Sofi professionals state, “Get a little bit of taste of very big names with partial shares.”
Look into mutual funds or exchange-traded funds
Mutual funds and exchange-traded funds (ETFs) are two types of investments that allow you to buy partial stocks.
A mutual fund is a pool of money invested in stocks, bonds, and other assets. In other words, it’s like a collection of partial stocks! An ETF is like a mutual fund but trades on an exchange just like any other stock.
Both mutual funds and ETFs have lower fees than buying individual shares; this makes them good options for people who want to invest in partial stocks but want to avoid the hassle or cost of researching individual companies (or owning many small investments).
You can still invest in the stock market even if you don’t buy a whole stock. There are lots of ways to invest in partial shares, such as through DRIPs, fractional shares and apps that let you buy stocks with small amounts of money. If these options are out of reach for your budget, consider buying mutual funds or exchange-traded funds instead.