Historically, investing in stocks has been the best way to earn, increase savings, combat inflation and make sure your money is working for you. However, the sheer price of company stocks has historically presented a great barrier to entry for beginners, many of whom are forced to forgo the stocks of premium companies. Luckily, Olymp Trade provides fractional units of a stock for our users. Fractional units allow investors to buy a portion of a share instead of the share in its entirety, making it easier to build a portfolio of stocks using a small amount of money.
How to invest in the stock market
Without getting too deep into fundamental analysis, a good investment in a company’s stocks involves choosing a company that provides a needed service. If you find yourself using Facebook or Instagram every day or use their services to market your business, you are not alone. Today, 3.51 billion people actively use Meta’s products on a monthly basis. Certain businesses depend entirely on advertising through social media. This is why we consider Meta (the parent company of Facebook and Instagram) a good investment option.
The current share price of Meta is about $130. This is relatively expensive, considering you need to buy more than one share in order to make sufficient money. This is where fractional units come into play. In order to invest in Facebook with Olymp Trade, one fractional unit would only cost $1.30. This is an excellent alternative to buying entire shares that allows beginners to get into the market. Experienced traders and wealthy investors can also make use of this feature for portfolio expansion and improved asset management.
Step-by-step guide: How to start trading shares as fractional units
Olymp Trade is intuitive and easy to use even if it’s your first time on such a platform. When on Olymp Trade, you can access fractional units from Stocks mode.
Even for beginners, buying stocks is fairly straightforward, but here’s a short guide:
- First, when you select an asset, you will see Fixed Time, Forex and Stocks at the top in the left window. Head over to the Stocks mode.
- A list of available stocks will be displayed. You can further filter the stocks by region: Asia, Europe and USA. For now, we will keep the full list of stocks open.
- The list first lists stocks that are currently available to trade because their stock market is open. Below the name of the stock is the price for one share, while the value on the right is the minimum purchase amount. Click on the stock that you want to buy.
- The stock that you click on will expand and its price chart will fill the main screen. The Buy button will appear on the right side of the chart if the stock market that the stock pertains to is currently open.
- Click Buy when you are ready to purchase fractional units of the stock. An information window will appear. You can buy parts of the stock by entering in either an amount in dollars or by quantity. The amount of money you choose to invest is up to you. The system will then automatically calculate how many units you can buy according to the value entered. This calculation can be viewed in the “Amount ($)” field.
- If you choose to purchase by quantity, you can enter the quantity of the stock’s units you want to buy. The price per unit is available to view under “Quantity.” Choose your desired quantity of the stock and click Buy.
- Congratulations, you now own at least 0.01 units of the stock! You will see a “Purchase Complete” window with all the information about your trade. You can see the information about your purchase in the Portfolio tab in the Trades window. From this tab, you can control your investment portfolio, buy more assets or sell your existing ones.
Dollar-cost averaging
A simple strategy that we can recommend is setting aside a certain amount of money each month and investing it into stocks. This is one of the most effective ways to invest, and is called dollar-cost averaging. It is often how retirees in the United States invest their retirement money. Without fractional shares, you would have to save up the full amount to purchase one share, and until you can afford to do that, your capital would be sitting in your account, not doing anything.
Some of the best stocks to invest in right now are also some of the most expensive, and building a diversified portfolio could cost upwards of $10,000. Using a dollar-cost averaging strategy with fractional units allows you to invest even the smallest monthly amount that you’re able to set aside. Remember that the key principle of investing is that it’s a long-term commitment that is proven to work when you stick to your plan.
Getting started
As you can see, the process of buying and selling fractional units is easy. It’s particularly valuable for investors who are working with limited capital but also an important tool for savvy investors wanting to diversify or hedge their positions. Fractional units of shares allow you to build a portfolio that may otherwise be unaffordable. That being said, make sure you maintain a healthy risk management regime and don’t forget to use technical analysis tools.
When just starting out, traders need education and support for learning the ins and outs of investing as a beginner along with a low-cost starting point. By offering fractional units, Olymp Trade has lowered the barrier to entry for investing. We invest in our traders by providing a wide range of support tools, free webinars and guides so they can learn, trade and advance on a platform designed to help them succeed. Try it out today to get started on your journey to financial freedom!
