Buying fractional shares also lowers the risk of getting hurt financially if a single company you own tanks. Imagine there’s a company you want to invest in that’s trading at $1,000 a share right now. If you buy a full share and that company’s stock values plunges to 50% of its current value, you could end up with a $500 loss. But if you decide to buy a quarter of a share of that stock, you’d only be looking at a $125 loss.
Fractional shares allow you to buy a portion of a share of stock if a full share is out of reach financially or too expensive for your taste. The upside of buying them is that you’ll get a chance to load up on a wider range of stocks, thereby lending to more diversity in your portfolio.
There’s no sense in assembling an investment portfolio that causes you constant stress. In fact, if you go that route, you may be more likely to react when market conditions decline and sell off stocks in a panic, thereby digging yourself into a hole.
Do what helps you sleep at night
All of these investment choices are a good bet for the risk-averse. And even if your appetite for risk is fairly healthy, it pays to give them a look as well.