What is fractional investing in international stocks?

Fractional investing is a growing trend in global stock markets that allows investors to buy a fraction or a portion of a single share of stock, instead of having to buy a whole share. This concept is especially useful for those interested in investing in high-priced stocks of companies like Amazon, Tesla, or Google, where the price of a single share can be quite expensive. Fractional investing opens up new opportunities, making it easier for small investors to access expensive stocks in international markets.

1. What is Fractional Investing?

Fractional investing allows investors to buy a portion of a share, rather than the entire stock. For example, if the price of one share of a company is $1,000, fractional investing lets you buy just $100 worth of that share—meaning you own 10% of a share. This makes it much easier to diversify your investments by owning smaller amounts of different high-value stocks.

This type of investment can be done in stocks, ETFs (Exchange-Traded Funds), or mutual funds. It's especially useful for new investors who don’t have large amounts of capital but want to invest in leading companies worldwide.

2. Benefits of Fractional Investing

Fractional investing offers several benefits, making it an attractive option for small and new investors:

• Affordable Access to Expensive Stocks: Fractional investing makes it possible to invest in stocks of companies with high share prices, such as Amazon or Tesla, without needing large amounts of capital.
• Diversification: Investors can diversify their portfolio by owning fractional shares of different stocks, even in industries they may not have been able to afford otherwise.
• Low Minimum Investment: Many platforms allow you to start investing with as little as ₹100 or ₹500, making it easy to get started without large sums of money.
• Compounding Growth: By purchasing fractional shares of growing companies, investors can benefit from the long-term appreciation of the stock’s value, even with small investments.

3. How Does Fractional Investing Work?

To understand how fractional investing works, let's break it down into simple steps:

• Select the Stock: You choose a stock that you want to invest in. This could be a popular stock like Google, Tesla, or any other company listed on global stock exchanges.
• Choose the Amount You Want to Invest: Instead of buying a full share, you can choose the dollar or rupee amount you want to invest. For example, if a share costs $2,000 and you want to invest ₹10,000, you can purchase a fraction of that stock.
• Broker Executes the Transaction: Your broker will then buy the equivalent portion of the stock for you. This is done using real-time prices, and you’ll own a fraction of the stock rather than the full share.
• Ownership of Fractional Shares: The platform or broker keeps track of the fractions you own. You’ll still get benefits like dividends or price appreciation, just based on the fraction you own.

4. Which Platforms Offer Fractional Investing?

Several online brokerage platforms offer fractional investing, including popular services like Angel One. These platforms make it easy for Indian investors to purchase fractional shares in international stocks. Here’s a list of some platforms where you can start fractional investing:

• Angel One: A reliable platform for Indian investors that offers fractional investing in global stocks. Angel One’s easy-to-use interface allows you to trade in top US stocks.
• Groww: An Indian platform that gives access to international markets, including fractional shares of popular stocks.
• Upstox: Another popular Indian brokerage offering fractional investing in major international markets like the US and Europe.

5. Risks of Fractional Investing

While fractional investing offers many benefits, it's essential to be aware of the risks:

• Market Risk: Like any other investment, fractional shares are subject to market fluctuations. Your investment’s value can go up or down based on market conditions.
• Liquidity Risk: Some fractional shares may be harder to sell compared to whole shares, especially if the platform you use doesn’t allow direct sale of fractions.
• Fees: Certain brokers may charge higher fees for fractional investing. Make sure to check the fee structure before investing.
• Limited Voting Rights: If you own fractional shares, you may not have the same voting rights that full shareholders have during annual meetings or other decisions.

6. Conclusion

Fractional investing has revolutionized how small investors can access expensive stocks in global markets. It allows you to diversify your portfolio without needing large amounts of capital. However, it’s crucial to understand the risks involved and choose the right platform to ensure your investments are secure. By starting small and investing regularly, you can grow your wealth over time.