What it is
A fractional share is a portion of 1 whole share of a company’s stock. Some investing platforms allow people to buy and sell these products to make stocks more affordable.
Currently, the Philippine Stock Exchange (PSE) doesn’t allow fractional trading. Instead, you’ll find only foreign investing platforms offering fractional shares of global stocks.
What it means for you
If you want to invest in a foreign stock but its price is too high for your budget, you may still be able to invest through fractional shares.
Brokers that offer fractional shares allow people to specify how much money they want to invest – usually a dollar amount – instead of requiring a minimum number of whole shares per transaction.
For example, if the price of 1 share is $200 and you only have $5 to invest, you can still put in your $5 to own 0.025 or 2.5% of a share of that company.
If you’re only getting started with international investing, fractional shares can make it easier for you to dip your toes in the global stock market.
Before doing so, make sure you understand the risks and are prepared to handle them.
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