Table of Contents
Introduction
Investing in the stock market has traditionally required purchasing whole shares of a company's stock. However, with the rise of fractional share investing, individuals can now own a portion of a share, making investing more accessible and affordable. Fidelity, one of the leading brokerage firms, offers the option to buy fractional shares, allowing investors to diversify their portfolios and invest in high-priced stocks without breaking the bank. In this article, we will explore how to buy fractional shares on Fidelity and the benefits it offers to investors.
What are Fractional Shares?
Fractional shares are a way for investors to own a portion of a share of a company's stock. Instead of buying a whole share, investors can purchase a fraction of a share, such as 0.5 or 0.25. This allows investors to invest in high-priced stocks that they may not be able to afford otherwise. Fractional shares are particularly beneficial for investors who want to diversify their portfolios and invest in multiple companies without having to allocate a large amount of capital.
Why Buy Fractional Shares on Fidelity?
Fidelity is a well-established brokerage firm with a strong reputation in the financial industry. Here are some reasons why buying fractional shares on Fidelity is a smart choice:
- Access to a Wide Range of Stocks: Fidelity offers a vast selection of stocks, including both domestic and international companies. This gives investors the opportunity to invest in a diverse range of industries and sectors.
- No Commission Fees: Fidelity does not charge any commission fees for buying or selling fractional shares. This means that investors can buy and sell fractional shares without incurring any additional costs.
- Automatic Dividend Reinvestment: Fidelity allows investors to automatically reinvest their dividends into additional fractional shares. This can help accelerate the growth of an investment portfolio over time.
- Flexible Investing: With fractional shares, investors have the flexibility to invest any amount of money they desire. Whether it's $10 or $1,000, investors can allocate their capital according to their financial goals and risk tolerance.
How to Buy Fractional Shares on Fidelity
Buying fractional shares on Fidelity is a straightforward process. Here's a step-by-step guide:
Step 1: Open a Fidelity Account
If you don't already have a Fidelity account, you will need to open one. Visit the Fidelity website and click on the “Open an Account” button. Follow the instructions to complete the account opening process. You may need to provide personal information and financial details.
Step 2: Fund Your Account
Once your Fidelity account is open, you will need to fund it. You can transfer funds from your bank account or deposit a check into your Fidelity account. Fidelity offers various funding options to suit your preferences.
Step 3: Research and Select the Stock
Before buying fractional shares, it's essential to research and select the stock you want to invest in. Fidelity provides a range of research tools and resources to help you make informed investment decisions. Consider factors such as the company's financial health, growth prospects, and industry trends.
Step 4: Determine the Investment Amount
Decide how much money you want to invest in the stock. Fidelity allows you to invest as little as $1 in fractional shares, so you have the flexibility to allocate your capital according to your budget and investment goals.
Step 5: Place the Trade
Once you have selected the stock and determined the investment amount, it's time to place the trade. Log in to your Fidelity account and navigate to the trading platform. Enter the stock symbol and the dollar amount you want to invest. Fidelity will automatically calculate the number of fractional shares you will receive based on the current market price.
Step 6: Review and Confirm
Before finalizing the trade, review the details to ensure everything is correct. Double-check the stock symbol, investment amount, and any additional instructions you may have. Once you are satisfied, click the “Confirm” button to execute the trade.
Benefits of Buying Fractional Shares on Fidelity
Investing in fractional shares on Fidelity offers several benefits:
- Accessibility: Fractional shares make investing more accessible to a wider range of individuals. Investors can start investing with small amounts of money and gradually increase their investments over time.
- Diversification: Fractional shares allow investors to diversify their portfolios by investing in multiple companies across different industries. This helps spread the risk and potentially increase returns.
- Cost-Effective: Fidelity does not charge any commission fees for buying or selling fractional shares. This makes it a cost-effective option for investors, especially those who want to make regular investments.
- Flexibility: Fractional shares offer flexibility in terms of investment amounts. Investors can allocate their capital according to their financial goals and risk tolerance, without the need to buy whole shares.
Summary
Buying fractional shares on Fidelity is a convenient and cost-effective way to invest in the stock market. With Fidelity's wide range of stocks, no commission fees, and automatic dividend reinvestment, investors have the opportunity to build a diversified portfolio and grow their investments over time. By following the simple steps outlined in this article, investors can start buying fractional shares on Fidelity and take advantage of the benefits it offers.
