The rise of fractional investing: How to own shares in top companies

Imagine being able to own a slice of your favourite tech giant or renowned brand without needing a big sum of money. That’s where fractional investing comes in. Fractional investing is changing the landscape of stock ownership, making it possible to invest in top companies without needing substantial capital. 

Traditionally, owning shares in high-profile companies required significant investment, but fractional investing allows you to buy portions of a share, lowering the barrier to entry. This approach not only gives you access to high-value stocks but also helps diversify your portfolio with less financial risk. 

What is fractional investing?

Fractional investing allows you to buy less than a full share of a company’s stock. Instead of needing to purchase whole shares, you can invest any amount of money into a stock or exchange-traded fund (ETF). For example, if a share of ABC company costs $1,000, and you want to invest $200, you can buy 1/5th of the ABC company share. 

This approach offers greater flexibility and makes investing more accessible, especially in high-priced stocks. Historically, fractional shares were often created through stock splits or dividend reinvestment plans, but with the rise of online brokerages, buying fractions of shares has become more common and easier to do. 

However, there are some limitations. Fractional shares usually don’t come with voting rights, and some brokers may restrict when you can sell them or charge small fees. Despite these drawbacks, fractional investing opens up new opportunities for investors to diversify their portfolios without needing a large amount of capital.

Top companies in 2024

These top companies are worth considering due to their strong market positions, innovative capabilities, and growth potential in 2024. These companies are well-regarded for their ability to adapt to changing market conditions and continue to deliver solid financial performance. 

By learning about these firms, you can tap into their ongoing success and benefit from their established track records. It’s important to evaluate each company’s performance, industry trends, and alignment with your goals to make informed decisions.

No.CompanyHalal Status
1.Apple (APPL)Halal
2.Nvidia (NVDA)Halal
3.Eli Lilly (LLY)Halal
4.Broadcom (AVGO)Halal
5.Tesla (TSLA)Halal
6.Exxon Mobil (XOM)Halal
7.Visa Inc (V)Halal
8.The Procter and Gamble Co (PG)Halal
9.Johnson and Johnson (JNJ)Halal
10.Mastercard (MA)Halal

Companies like Apple, Nvidia, Eli Lilly, Broadco, Tesla, Exxon Mobil, Visa, The Procter & Gamble Co, Johnson & Johnson, and Mastercard are notable choices. These firms not only lead in their respective sectors but also align with halal investment principles, making them suitable for those who prioritize Sharia-compliant options.

How to own shares of top companies with fractional investing?

Fractional investing is similar to normal investing in that both involve buying shares of a company and benefiting from any gains or dividends. The key difference is that with fractional investing, you can purchase less than one full share, allowing you to invest smaller amounts of money in high-priced stocks.

In contrast, traditional investing typically requires buying whole shares. Both approaches give you ownership of the company and offer proportional returns, but fractional investing provides more flexibility and accessibility for investors with limited capital.

Here’s how it works:

  1. Choose a brokerage: To get started, you need to set up an account with a brokerage that offers fractional shares. Many modern brokerages provide this option, making it easy to invest in high-priced stocks without buying whole shares.
  2. Decide how much to invest: Instead of buying a full share, you specify the amount of money you want to invest. For example, if you want to invest $100 in a stock priced at $500 per share, you’d end up owning 0.2 of a share.
  3. Understand the benefits: Fractional shares let you invest smaller amounts and diversify your portfolio without needing large sums of money. You still get a proportional share of any gains or dividends, just like with full shares.
  4. Know the differences: While fractional shares give you similar benefits to full shares, they may have some limitations. For instance, you usually don’t get voting rights with fractional shares, and some brokerages might impose restrictions or fees on selling them. However, the core value and the growth potential of the shares remain the same.

By using fractional investing, you can gain exposure to top companies without needing to buy expensive full shares, making it easier to manage and grow your investments.

Where can I buy fractional shares?

When it comes to buying fractional shares, you have several options to choose from, including online brokers, robo-advisors, investment apps, and traditional brokerages. 

Each platform offers unique benefits depending on your investment style and goals, whether you prefer full control, automated investing, or an accessible entry point for beginners.

Online brokers

Many online brokers now offer fractional shares. Popular platforms allow you to buy fractions of stocks and ETFs. Such platforms are great if you want full control over your investments and the flexibility to choose exactly where your money goes.

Robo-advisors

If you prefer a hands-off approach, robo-advisors are good options. These platforms automatically invest your money in fractional shares based on your financial goals and risk tolerance. They manage the portfolio for you, making investing simple and automated.

Investment apps 

Some apps focus on making investing accessible. They allow you to buy fractional shares with as little as a few dollars. These apps often combine investment options with educational tools, making them ideal for beginners.

Traditional brokerages

Some traditional brokerages also offer fractional investing. They provide a balance between the flexibility of online brokers and the full-service experience of traditional financial institutions.

Conclusion

Fractional investing has opened the door for everyday investors to own shares in top companies that were once out of reach due to high costs. Breaking down the barriers of traditional investing allows you to diversify your portfolio with smaller amounts of money, making stock ownership more accessible and flexible. 

Whether you choose to go through an online broker, a robo-advisor, or an investment app, fractional investing empowers you to take control of your financial future without needing a large upfront investment. 

As more people discover this approach, the investment landscape is becoming more inclusive, offering opportunities for anyone to grow their wealth, one fraction at a time.

FAQs on Fractional Investing 

1. Is fractional investing worth it?

If you’re new to investing and don’t have a lot of money to start with, fractional shares can be a game-changer. They allow you to enter the market right away and begin reaping the benefits of compounding returns earlier. Plus, you can diversify your portfolio with a smaller investment.

2. Do fractional shares make money?

If you invest in fractional shares, you can still receive dividends proportional to the portion of the share you own. For example, if you own 50% of a share and the company pays a dividend, you would receive 50% of the dividend payment per share.

3. Is it easy to sell fractional shares?

These may be more difficult to sell quickly due to lower demand, which could impact your ability to cash out. Other than that, certain brokers may impose fees for purchasing and selling fractional shares.

4. Is fractional share safe?

While they make it easier for new investors to enter the market, relying solely on individual stocks can also increase your exposure to risk.

Disclaimer: Important Information

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