One of the stumbling blocks that keep people from investing in big companies is the exorbitantly high share price of the targeted organizations. Take, for instance, the large technology behemoths like Amazon or Apple, whose shares trade at a very high price and act as a deterrent for the small investors. This, in turn, means that only big whales get the right to trade in this upper-end of the price pyramid. But now, thanks to the fractional share services of Robinhood Financial, where everybody can participate and invest in the big organizations as well.
Fractional Share Services
As the name suggests, the fractional share services allow the participant to own a fraction of the whole share of the company. This fraction can be as little as one-millionth of a particular share and you can avail the same kind of convenience on Exchange Traded Funds (ETFs). Some of the significant and distinguishing features of this service include trading on a real-time basis and completely commission-free facility.
The primary objective behind this service is to help democratize the buying and selling of shares. In other words, this facility helps to attain the objective of financial inclusion by providing an opportunity for investors who otherwise won’t be able to invest in large organizations owing to their high share price. With an investment as little as $1, you can start building your portfolio and this option also helps you to have a wide variety of items in your stock basket. This is another way of managing the investment risk more efficiently with options spreading across the stocks and industries.
How to use Service
To place the order, you need to mention the shares’ amount or amount of dollars in the investment. The system will automatically round off your order to the nearest whole figure to place an order.
The facility is available only for the market orders categorized under good for the day as the convenience of extended hours is not supported by this format for now. The stock for which you want to utilize the fractional trading facility must have a market capitalization of over $25,000,000 with a price value of more than $1/share. The eligible investors of fractional shares will receive the dividend, but you cannot enjoy the transfer facility with fractional shares.
In sum, the facility of fractional trading is great for investors who lack funds but still want to invest in big organizations for enriching their portfolio and lowering the risk. On a broader scale, this convenience has a holistic objective to achieve – to democratize the investment process while spreading the cause of financial inclusion.