Investing in stocks of companies like Berkshire Hathaway and Amazon requires you to part with thousands of dollars of cash. But having them in your investment portfolio means a greater probability of higher returns, global exposure and diversification, and a solid investment portfolio.
What if someone told you that you could invest in these blue-chip stocks without investing thousands of dollars? With fractional ownership of shares, you can have your cake and eat it too!
Fractional ownership of shares allows you to buy a part of one whole share. This also means that you only pay a minimum fraction of the cost of the whole share. So, with as little as Rs. 10 you can have ownership in some of the biggest companies in the world. Other investors buy the remaining part of that whole share.
There are several benefits of fractional ownership and here are some of the most remarkable ones.
- Allows you to begin investing with small amounts
One of the biggest advantages of fractional ownership is that it allows you to begin investing in the stock of any company with whatever amount of money you have. If you want to invest in Tesla, for instance, you’ll need about $279.82 (as of 5th July 2023) which is about Rs 23,021 just for a single share. Another thing to note is that this amount will most likely keep increasing as the exchange rate fluctuates and the Rupee depreciates against the dollar.
But through fractional ownership of stock, you don’t need to have lakhs of rupees saved up before you can begin adding big-ticket U.S. stocks to your investment portfolio. Fractional ownership allows you to enter the global market immediately and you don’t have to wait to start repeating the benefits of compounding returns.
- Enables higher portfolio diversification
The stock markets are volatile and any change in the social, economic, or political environment brings with it a range of associated risks. Take the pandemic, for instance. The Indian stock market took a big hit in the first few weeks of COVID-19; there was roughly a 40% plummet in the benchmark indices. But not all stock markets and not all industries reacted the same way. It’s therefore essential to follow the most important rule of building a portfolio and diversify.
Fractional ownership of shares brings with it two ways in which you can diversify. The first is by including stock listed on global stock markets, such as the U.S., and allowing your portfolio exposure to various economies. Experts believe that investors should have at least 5 to 10% international investments exposure. The second way is by taking a small amount of money and buying the stock of multiple companies. For instance, if you have even $10, you can invest in five to six different stocks. Hence, fractional ownership provides you access to a broader selection of stocks without needing a lot of capital.
- Grants direct ownership of stock
When it comes to investing, you can either have direct or indirect ownership. Whether you buy shares through fractional ownership or as whole shares, if you own 5% of shares in, say, company A, you are a direct owner. However, if you own 10% shares of company B which owns 20% shares of company C, then you are an indirect owner of company C.
Indirect ownership comes with investments such as mutual funds. Direct ownership, like in the case of fractional ownership of shares, gives you more control over your money. Unlike in a mutual fund, where you have no control over where the fund manager invests your money, you get to specifically pick the stock that you want to invest in.
- Helps with precise asset allocation
When it comes to asset allocation and diversification, it can be hard to achieve the sweet spot with limited funds. For instance, if you know you need to allocate about $100 to tech stocks but a single tech stock like that of Alphabet Inc. costs $2,800, it will disturb the balance of your portfolio. Even if you have the $2,800 capital, as per your financial goals, it may not be necessary that you allocate all these funds to one type of business.
With fractional ownership of shares, you can invest the precise amount of money you want to achieve your ideal asset allocation. Fractional ownership also helps with effective dollar-cost averaging. Dollar-cost averaging is an investment strategy that involves investing equal amounts of money at regular intervals irrespective of the price of the asset. Here, you are focused on the amount of money you want to invest and not the price of the share. Hence, you don’t try to time the market to make investment decisions but do so according to your desired asset allocation.
Don’t wait any longer to get started
If you only have domestic stock in your portfolio, the proposition of investing in global stock may seem both exciting and intimidating. But the good part is that you don’t have to navigate investing in international markets all by yourself!
Appreciate allows for easy and strategic diversification of your portfolio. Our AI-based algorithm tracks market signals and helps you manage your portfolio seamlessly. We help you minimise the losses and maximise the opportunities present in market volatility when investing in the U.S. market.
If you cannot wait to get started and own a slice of blue-chip U.S. companies, make sure you log on to www.appreciatewealth.com and sign-up to learn more about these possibilities.
