Purchasing Fractional Shares on Fidelity
Diversifying your investment portfolio is a fundamental principle for mitigating market risk. If you're a novice investor or working with a constrained budget, achieving diversification can be challenging. Investing in fractional shares is a smart way to invest in expensive stocks, even with limited funds. In this article, we will explore the mechanics of fractional share investment at Fidelity and answer common questions to help you decide if this approach is right for you and your financial goals.
Acquiring Fractional Shares Through Fidelity: A Simplified Guide
Initiating your fractional share investment journey on Fidelity is a straightforward process. With access to over 7,000 U.S. stocks and ETFs for fractional share trading, Fidelity provides diverse options for investors, ensuring ease of entry with low fees and minimum investment requirements.
- Open an account with Fidelity. Creating an account with Fidelity is a simple process that requires you to provide basic personal information and choose the type of account you want.
- Log in to your Fidelity account and fund it. Once you have created an account, you must log in and fund it. Remember that fractional share trading takes place in real time, and to place a trade, the funds must be settled and available in your account.
- Click on the "Trade" tab. The "Trade" tab is at the top left corner of your Fidelity dashboard. Clicking on it will reveal a dropdown menu with a form that you need to fill out regarding the type of trade you want to make.
- Change the setting from "Shares" to "Dollars." By selecting the "Dollars" setting, you can buy fractional shares based on a specific dollar amount rather than purchasing a specific number of shares. You can enter dollar amounts up to two decimal places, such as $50.75. Your order will be converted into shares up to three decimal places and rounded down to the nearest decimal.
- Submit your order. Fractional share orders can be entered as market or limit orders and are only valid for the day. At the bottom of the trading form, click on "Preview order." This will take you to a confirmation screen where you can edit, cancel, or place the order. Fractional share trading is conducted in real-time during market hours so that you will know the share price.
Opening a Fidelity Brokerage Account: Essential Requirements
When initiating a new account at Fidelity, providing basic personal and financial details is imperative. Tailor your account type selection based on your unique financial objectives among the approved retail accounts for fractional share transactions:
- Standard brokerage accounts
- Individual retirement accounts
- Youth account
- Health savings accounts (HSAs)
- BrokerageLink accounts (available through select employer plans)
During the online account setup, furnish the following personal and contact details:
- Full name
- Social Security number
- Date of birth
- Phone number
- Email address
In addition to personal information, disclose your financial details, outlining your current financial status and investment goals. Fidelity employs "know your client" questions to align your profile with suitable investments based on your financial situation and risk tolerance. Expedite funding by linking your bank account or utilizing a mobile deposit. Alternatively, traditional methods like mailing a check remain viable.
Fidelity's Advantages in Fractional Share Trading
Unlock numerous benefits by opening a Fidelity account for fractional share trading:
- Diverse Selection: Access over 7,000 U.S. stocks and ETFs, surpassing the limited offerings of some competitors.
- Direct Indexing: Utilize fractional shares through Fidelity Managed FidFolios, providing ownership of actual stocks instead of relying solely on ETFs.
- Fee Elimination Commitment: Fidelity is dedicated to eradicating standard account fees, contributing to its industry leadership.
- User-Friendly Features: Enjoy a streamlined experience with a user-friendly platform, robust portfolio analysis, and a redesigned app dashboard.
- Superior Execution: Experience excellent order execution, enhancing trading efficiency.
- Cutting-Edge Platforms: Benefit from the Dynamic Active Trader Pro platform and an upgraded mobile experience.
Fidelity, a longstanding industry leader, not only offers a vast array of investment options but also stays at the forefront by introducing innovative products such as exposure to crypto and digital payments. This commitment to progress is delivered through accessible desktop and mobile platforms, ensuring investors stay informed about their accounts and financial goals.
Considerations for Fractional Share Investment at Fidelity
Explore a vast array of over 7,000 stocks and ETFs offered by Fidelity for fractional share investing. The unique FidFolios product empowers investors to craft personalized indexes.
Cost and Commissions
Fidelity facilitates a seamless start with $0 commissions for online U.S. stock and ETF trades. There are no account fees or minimums for initiating a retail brokerage account.
Investors can engage in fractional share buying with a minimum investment of $1, and there is no threshold for opening a self-managed investment account. Opting for Fidelity Managed FidFolios, however, requires a minimum investment of $5,000.
Upon account creation, access an array of research amenities directly from your account dashboard. The "News & Research" tab provides a dropdown menu with the latest news, watch lists, quotes, alerts, and more.
Leverage Fidelity's educational content under the "Planning & Advice" tab on the dashboard to enhance your investment knowledge. Investors can access articles covering various topics, from investing basics to long-term care planning. Easily retrieve information on stocks, mutual funds, ETFs, and other investment vehicles.
Fidelity: Leading U.S. Brokerage in Evolution
Founded in 1943 and headquartered in Boston, Fidelity is the largest U.S. brokerage, serving 40 million individual investors with $10.3 trillion under administration and $3.9 trillion in discretionary assets. Its vast scale enables the provision of competitive products and services with a client-friendly fee structure. Despite its traditional stature, Fidelity maintains industry leadership through technological innovation, introducing digital investment management, crypto, and digital payments. The rollout of services like Active Trader Pro and the Fidelity Metaverse further underscores Fidelity's commitment to staying at the forefront of the financial industry.
Financial Dynamics of Fractional Shares
The profitability of fractional shares mirrors the inherent uncertainties of any investment dictated by the market performance of the chosen asset. Opting for fractional shares offers a strategic approach to dollar-cost averaging, systematically channeling funds into the market. Regular investments lead to accumulating "slices" from various stocks, capitalizing on market downturns, and progressively constructing a diversified portfolio of full shares. Unlike the conventional model that broadens diversification solely as the account balance expands, the distinctive advantage lies in fostering diversification throughout the entire accumulation phase.
Investors can accumulate wealth through fractional shares on platforms like Fidelity, which offer dynamic and strategic investment opportunities. The potential to profit or incur losses is inherent in any investment, yet the systematic approach of dollar-cost averaging mitigates risks. By continuously investing in slices of various stocks, individuals not only seize opportunities during market dips but also cultivate a diversified portfolio over time. This innovative investment strategy, emphasizing gradual diversification, underscores the adaptability and long-term viability of fractional share trading.