My friend was a college student studying in the UK then, and she wanted to invest in Amazon.

She had only $100, which meant that she couldn’t afford a single Amazon share.

With fractional investing, she was able to buy 1/30th of a share and started investing immediately.

As she learnt more, she continued adding small amounts to her portfolio each month, and was gradually building wealth and confidence in investing.

This is how fractional investing makes investing realistic for everyday people, not just the wealthy.

Some shares of big companies can cost thousands of dollars.

For most everyday people, that can feel out of reach.

But a trend called fractional investing is helping more people, including those with limited money, to invest and grow their wealth.

What Is Fractional Investing?

Fractional investing means buying a part of a share of a company instead of a whole share. For example: If one share of Amazon costs $3,000 and you want to invest $50, fractional investing lets you buy 1/60th of a share.

Even though you don’t own a full share, you still benefit from price changes in the stock. If Amazon’s stock goes up by 10%, your $50 investment also grows by 10%.

Why It’s Called “Democratizing” the Stock Market

When we say fractional investing is democratizing, it means it’s making investing fairer and more accessible. Before fractional investing, you needed large amounts of money to buy expensive stocks, but now you can start with just a few dollars.

1. Lower Barrier to Entry

   • You don’t need thousands of dollars to buy one share of a company. Even small amounts can be invested.

2. Easier Diversification

   • Diversification means spreading your money across multiple stocks to reduce risk. Fractional investing lets you buy tiny portions of many companies without needing a lot of money.

3. Encourages Beginners to Start

   • You can start small, learn how investing works, and increase your investments gradually over time.

How Fractional Investing Works

Most fractional investing happens through online brokerages or investment apps. ]These platforms make it easy to buy and sell fractional shares.

1. You choose a company and decide how much money to invest.

2. The app calculates how much of a share your money can buy.

3. The platform either pools your money with other investors or tracks your fractional share internally.

4. You can sell your fractional share anytime, just like a full share.

You also receive dividends (profits shared by the company) proportional to your fraction of the share.

Benefits of Fractional Investing

Fractional investing comes with many advantages like accessibility, flexibility, diversification, and learning opportunity.

Fractional investing is very helpful, but there are a few things to consider:

1. Liquidity: Some platforms make it harder to trade fractional shares outside their app.

2. Fees: Some platforms charge small fees that can reduce returns on tiny investments.

3. Limited Rights: Fractional shares may not come with full shareholder voting rights.

Even with these minor limitations, fractional investing is still a major step forward in making the stock market more accessible.

Conclusion

You can be a student, young professional, or someone with limited funds, fractional investing allows you to take part in the stock market and grow your money over time.

It is democratizing finance, making investing fairer, more accessible, and easier to understand.