The Seven “Fractional Share” Stocks You need to Own Today
When Robinhood Markets Inc. launched its trading app back in early 2015, it had a customer “waitlist” of about 700,000 investors.
It had a user list of 10 million in 2019, 13 million last year, and an estimated 20 million in January when the zero-commission-trading pioneer found itself at the center of Reddit’s r/WallStreetBets (WSB) battle against big hedge funds.
Last August, Charles Schwab had 12.5 million active accounts – making it the biggest discount broker in America. By the end of February – after the WSB GameStop (NYSE:GME) short squeeze stunned investors – that number had nearly tripled to 30 million. That’s a 140% increase in active users in just seven months.
Take the time to tally the user accounts at the top six brokerages and you’ll discover there are more than 100 million active retail traders – enough to change the way the stock market functions.
Enough to start a revolution.
But every revolution needs a spark, an ignitor to set it off.
And that spark was something the “experts” refer to as “micro-investing” or “slices” (in fact¸ you may even have seen the “slices” TV ad campaign where Schwab tells you to “own your tomorrow.”)
But I see something bigger… They’re not “slices” or “micro-investments.” They’re fractional shares.
Welcome to the “Fractional Shares Revolution.”
It’s a way to invest in a stock like Tesla Inc. (NasdaqGS:TSLA) – recent price $656.57 a share – for the price of a Big Mac, a Starbucks Latte, or a tank of gas.
More important, this fractional-shares strategy is a starting point… a way of mobilizing you.
It’s a path that starts with a few dollars. And if you keep snagging those fractional shares, even with spare change, it can end wherever you want – with tens of thousands, hundreds of thousands, or even a million dollars of your own.
In this special report, I’m going to tell you why this is truly a “revolution.” I’m going to demonstrate how a fractional-share strategy can work. And I’m going to give you the “Seven Fractional Shares to Buy Now.”
Buy them. Add to your positions as you see fit.
And watch your wealth grow.
The Seeds of Revolution
Forty years ago, as I got my start in “The Pit” at the Chicago Board Options Exchange (CBOE), the trading scene was very, very different. Wall Street was the mecca of the world’s financial elite. And the adage “it takes money to make money” certainly held sway.
And, for individual investors, money was always a kind of “Keep Out” sign-like obstacle. Commission fees were stout. Transfer fees padded the tab. Add in “odd-lot fees” and other expenses and made the barriers to individual investing even higher.
The cost of entry didn’t just keep the less-than-wealthy middle- and lower-income Americans from making money (something the rich take for granted). For retail investors, it took away their ability to control their own financial futures – outright stole it, in fact.
But now those obstacles are gone.
Charles Schwab became the first broker to slash its rates-something it did in 1975, creating what we now know as the “discount broker.”
Now almost all of the big-name brokers (Fidelity, TD AmeriTrade, TradeStation, Robinhood, and more) offer trades with commissions that are deeply discounted, or nonexistent. And you can do those transactions online – without the help of the human brokers of the past.
The first online brokerage popped up in 1992. And the innovators never looked back; now there are apps like WeBull – freely accessible to anyone with a smart device.
Then, in 2017, M1 Finance made waves with the introduction of fractional shares.
Fractional shares are exactly what they sound like: Instead of buying a whole share of Tesla, you can grab part of a share using that “pay-what-you-can-afford” strategy.
Do you have a spare $10? Managed to save $50 on groceries this week? However much you have on hand, you can grab a slice of a thousand-dollar stock – reaping the same benefits as a person who coughed up the full amount.
Then you can build on those stakes.
Set aside $10 to $50 to invest in that stock – either with regular, automated investments or with “buy-the-dip” cash infusions whenever your shares pull back.
Combine these approaches and you’ll be well on your way to becoming a full shareholder in some of the biggest wealth-creators in the stock market – including some whose hefty share prices have been obstacles for retail investors hoping to buy them.
Here’s hoping these seven stocks start you on your way.
The Significant Seven
So here are seven stocks you should be looking to amass stakes of using this fractional-shares strategy. Consider it your “Fractional-Shares Starter Portfolio.”
- Fractional-Shares Starter Stock No. 1: Amazon.com Inc. (NasdaqGS:AMZN) – With a recent trading price over $3,500, grabbing even a single full share of Amazon is way beyond the ability of a lot of retail investors. But as the dominant e-commerce heavyweight – heck, dominant retailer – Amazon is a must-own stock. Its successful forays into groceries and streaming are making it a “one-stop” destination play for consumers. But get some here and add to your stake on dips or via regular investments.
- Fractional-Shares Starter Stock No. 2: Apple Inc. (NasdaqGS:AAPL) – At a recent price of $133 a share, the maker of ubiquitous smart devices isn’t as pricey as some of its brethren. But it’s still a stock you want to own – in whole or in part. Start buying it here with cash on hand.
- Fractional-Shares Starter Stock No. 3: Tesla Inc. (NasdaqGS:TSLA) – I already mentioned Tesla… and with good reason. Electric vehicles (EVs) and driverless cars are hot topics that are destined to get hotter. Tesla (recently priced over $656.57) is already a “brand” in this space – because it’s an innovator. Buy some of this stock while it’s still way down from its $900 peak – and watch your wealth climb.
- Fractional-Shares Starter Stock No. 4: Target Corp. (NYSE:TGT) – As stocks go, Target is a fantastic base-builder and also happens to be my favorite “Big Box” retailer in the economy right now. Its recent trading price of about $237.12 makes it a “fractional shares” candidate.
- Fractional-Shares Starter Stock No. 5: Berkshire Hathaway (NYSE: BRK.B) – Billionaire and investing icon Warren Buffett built Berkshire into an iconic investment – an alluring collection of businesses and a stock portfolio that, over the long haul, has been a great wealth builder. The “A” shares trade at an insane $413,509.56 each – too stratospheric for even fractional-shares investors. But the “B” shares, at $274.66, are a superb candidate. And they’ll just keep growing.
- Fractional-Shares Starter Stock No. 6: JPMorgan Chase & Co. (NYSE:JPM) – Thanks to my career in finance, I’m a fan of banks – or, at least, the “right” banks. And JPMorgan fits the bill – especially at its recent price of $151.12 a share. It’s also a dividend-payer – with a current yield of nearly 2.4%. If you buy a fractional share of JPM, you’ll get an equal ratio of the $3.60 a year dividend payout – maintaining that yield on your stake.
- Fractional-Shares Starter Stock No. 7: SPDR S&P 500 ETF Trust (NYSEAcra:SPY) – A bit more conservative – but still want to build wealth through stocks? Consider some exchange-traded funds (ETFs), which you can also invest in fractionally. One we like a lot is the ETF proxy for the Standard & Poor’s 500 Index.
Once you move beyond these initial recommendations, there is some “fine print” to consider.
Not every brokerage offers fractional shares and, if they do offer them, the stocks you can buy in slices can be limited.
For example, Fidelity will let you buy a fractional share of any stock or ETF-listed in the National Market Index (think the Big Board and Nasdaq, for instance). Then you have Schwab, which limits fractional shares to stocks listed in the S&P 500. And then there’s SoFi Active Investment, which is so limiting you can only pick from 43 stocks or ETFs that they have pre-selected.
But don’t like those obstacles limit you; there’s plenty of upside.
Like any revolution, the “Fractional-Shares Revolution” is a tectonic-shifting event in the stock market.
It’s a wealth builder.
I’ve just got you started – make it work for you.