The Fractional Shares Revolution

Shah Gilani|July 28, 2022

Let me tell you: My first job on Wall Street was with the Chicago Board Options Exchange (CBOE) in the early 1980s – just before the start of the great bull market…

So I’ve been doing this for a very long time.

And no matter the market situation – whether it be bull or bear – there’s always been chances to have a shot at live-changing wealth opportunities.

Much of this is due to mobile trading apps and the “fractional shares revolution” democratizing the markets. Profits reaped from investing and trading are no longer exclusive to Wall Street hedge funds or individuals with billions of dollars to their name.

No matter how much money you have on hand, you can start investing today for as low as $5 a stock.

The Fractional Shares Revolution

When I first got started in the markets, regular investors faced a lot of obstacles that made it difficult and expensive to buy individual stocks.

If you wanted to buy a stock, you were almost compelled to buy a “round lot” – or shares in bundles of 100, 500, or 1,000.

Transaction fees were high to start with, and folks who bought less than a round lot were slapped with an additional “odd-lot” fee. If you couldn’t afford the fees, then you were locked out of the markets.

Fortunately, the path of equal stock market access was opened in 1975 when the U.S. Securities and Exchange Commission (SEC) abolished “fixed commissions” – the essentially illegal price-fixing scheme the American brokerage industry established to enrich Wall Street’s “old boys club” of hedge fund billionaires and trading desks.

This act of regulatory insurrection did exactly what the investing public and Charles Schwab (who championed the legislation) wanted: It gave rise to the discount brokerage business.

Today, there are dozens of discount brokerages and over 100 million active accounts across all of them – using retirement funds or disposable income to invest in the markets.

That’s 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 flame was the creation of fractional shares, referred to by some as “slices” or “microinvesting.” It’s a way to invest in a stock like Tesla Inc. (Nasdaq:TSLA) – recently priced at $1,000 per share – for price of a Big Mac, a Starbucks latte, or even a tank of gas.

More importantly, this fractional-shares strategy is a starting point on your path to wealth… a way of mobilizing you a few dollars a time.

If you keep grabbing fractional shares of a profitable stock – even with spare change – you could end up with tens of thousands, hundreds of thousands, or even a million dollars to your name.

That’s why I bring you a new fractional shares pick every Tuesday morning – stellar stocks that were historically inaccessible to retail traders on a budget, but you can invest $25, $50, $100… you can name your price.

How exactly to buy fractional shares (or “slices”) can vary from broker to broker, so I encourage you to call you brokerage directly to get started.

Note: not every brokerage offers fractional shares, and if they do, there may be limitations.

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 let those obstacles limit you; there’s plenty of upside.

Happy investing,

Shah Gilani
Chief Investment Strategist, Money Morning