The basic investment rules still apply – so do your personal research
Marques warned that trading whole or fractional shares shouldn’t be suitable for everybody – especially those that cannot take the time to research an organization before buying.
“Although trading in increments makes it easier to trade on a smaller budget, it requires a lot of research,” Marques said.
“In many cases, for the average Canadian, who may not have the time, interest or expertise to research companies or take that kind of risk with just one company, it still makes more sense to work with managed portfolios,” she suggested.
The basics of investing also apply to fractional investing, says Boisvert, corresponding to keeping track of your time horizon and risk tolerance.
For example, in case your goal is to make a down payment on a house in the subsequent yr, as an investor it’s best to not invest that cash in stocks that will be volatile within the short term, she explained.
Instead, depend on proven investment concepts like diversification, which can also be easier to realize with fractional shares, she said. Fractional shares also make it easier to purchase stocks at different prices, especially if the purchases are unfolded over several months.
It is significant not to place all of your eggs in a single basket and never to take a position greater than 5% of a portfolio in a single investment, Boisvert added.
“When it comes to buying stocks, you should avoid the fear of missing out (FOMO),” warned Boisvert.
