Fractional Shares Explained - Everything You Need To Know About Sharing Shares

Today, we talk fractional shares; what they are, how they work, and what you need to know before buying any!

This video is sponsored by Noa

DISCLAIMER:
This channel is for education purposes only and does not constitute financial advice - Richard is not responsible for investment actions taken by viewers. Please seek out a registered advisor if you require assistance (while Richard is a registered portfolio manager at WDS Investment Management, he does not provide advice through The Plain Bagel, which is not affiliated with his employer).

[Mikasks]

"Rather than buying a slice fo the pie, why not buy a slice of the slice"

This killed me.

[SamsonBiggz]

Love fractional shares. It feels like a lay-away program. I was able to buy an Amazon share using fractional shares. Now I could have just saved my money over the year and bought 1 share out right but I don't have that kind of will power. Now with fractional shares I bought $ 300 dollars worth every month until I had a full share. For some like me fractional shares is the way to go.

[olgierdvoneverec]

My brooker recently anounced they are going to start trading fractional shares, so this video is on perfect timing.

[KelechIwuaba]

I remember when I got access to fractional shares I was so excited to be able to invest $25 every two weeks. But then I found out that the brokerage was taking a $5 fee for it so I BOUNCED harder than Lebron driving to the hoop. I just went with passive index funds but now so many platforms have made it much cheaper and easier to use

[ohigetjokes]

Thanks for this. I have to admit I think I was a bit more enthusiastic about fractional shares than I should have been, and I feel a lot more informed now on how to deal with them.

[nicholasdean]

Fractional shares makes my life so much easier. Auto reinvest dividends in the companies I bought. (Target, Microsoft, Seagate, etc)

[eliteffsquadron]

Hi can you make a video on the different levels of the shares of the same company like level A and level B

[stephen-finance]

Democratized is right. It’s become easier than ever to grow wealth because of this. Although I think index funds and ETFs are better for beginners. And you can still buy into an index fund with as little as a dollar depending on the brokerage you use.

[jessechamberland]

This was a great video. Explained in a very logical and engaging way and considered many aspects of the subject! Thanks Plain Bagel.

[grouchyinvestor]

If the broker goes bankrupt, you'll get back your securities after some time (at least in Europe). Does it work the same with fractional shares?

[CommandoX]

Excellent segment -- thank you.

I would like to add that, at least to my recollection, Warren Buffett has admitted that at least some of his motivation to have refrained from splitting Berkshire's class-A shares is simply emotional pride (the company even waited a relatively long while prior to offering its class-B option).

[feynstein]

@The Plain Bagel I couldn't find a good video on how the value of the S&P500 index is actually calculated. Do you think you could tackle this issue?

[flyorraofficial]

I love your educational knowledge. As well as video production and editing. And nice background. Honestly I think you're super genius. Most people are not.

[jasonluong]

This is the best video on fractional shares. It would be even better by showing an example.

[TopSquad]

Love this format, informative, straight to the point and trying to make it as understandable as possible.
Thank you a lot Plain 🤗

[TooLateForIeago]

I started a taxable account with a service geared to novice investors which only allowed its customers to invest dollar amounts instead of specifying numbers of shares to buy or sell. Imagine my chagrin when I moved to a real brokerage and discovered that only whole shares are transferred between brokers. Every one of my fractional shares was liquidated at market price and the cash sent over instead.

[fernandodobbin]

In Brazil we have a similar concept. When you buy ordinary shares, you're actually buying a group of a hundred (if you buy two, you buy a group of two hundred and so on...). Fractional shares allow you to buy 1-99 shares by the same relative price.

So, let's say you want to buy 150 shares of XYZ. You'll have to place two orders to buy. One for 1 XYZ and another one for 50 XYZF.

[WhiteWulfe]

I love the sound of fractional shares. Means instead of having cash sitting in your account it can be put to use.

[RabianskiT]

ROUNDING UP isn’t mentioned in the video.

Commission-free brokers might offer you fractional shares with no fee, but they will keep rounding up your orders. For instance, 1 share might cost $1177, but when you buy 0.1 share you will pay $118 and when you buy 0.01 share you will pay $12.

As mentioned in the oversimplified example above it isn’t that big of a deal when you buy tenths of a share. However, if you start buying hundredths or thousandths of a share it can be quite costly.

[AlexanderPalumbo]

I just started doing this with the new recently merged Ameritrade and Charles Schwab, fractional share investing is NECESSITY in order to have the little guy having a chance to win and get into the market.