Buy fractional share

[$m0kin3053]

Hello ladies and gents,

Had a question in regards to buying fractional shares. Lets say someone buys a share from lets say GOOGLE (GOOG), I see that their share is 478.32 per share, so lets say Mr.Schmuck invest 100.00, what will be his profit, how will his profits raise? Will it be in cents? or should he not waist his time in a stock he can't afford?

Thanks for your time.

[aquaswim47]

Buying fractional shares is a marketing gimmic by ShareBuilder for those who otherwise cannot afford to trade stocks. It's $10 a trade ($4 to buy and $15.95 to sell). GOOG is a great company. However, I think that paying the extra $5.95 to buy and sell a stock (just to be able to trade in fractional shares) is foolish.

There's nothing wrong with a good mutual fund, but unless he is really sure about GOOG, he should pick another stock. That $6 is an insurance policy towards picking a company that is worse that Google. I personally wouldn't buy that insurance. If I were you, I would either buy 1 or 2 shares of GOOG on Scottrade when you have the proceeds or use Sharebuilder and pay an additional $3 per trade and buy it in fractional shares (.5 shares, 1.5 shares, 2.5 shares, etc). If you plan to hold long-term, GOOG is a great investment to put your money into so if that is your purpose, than using Sharebuilder might be wise. However, if it is a trade, pick another stock.

[Stocktrading101]

Had a question in regards to buying fractional shares. Lets say someone buys a share from lets say GOOGLE (GOOG), I see that their share is 478.32 per share, so lets say Mr.Schmuck invest 100.00, what will be his profit, how will his profits raise? Will it be in cents? or should he not waist his time in a stock he can't afford?

Good question! Well, with Google (GOOG) at $478.32 a share, $100 cannot purchase one share, so you sadly cannot buy the stock. You have to purchase atleast one share of any given stock. This is just the way the market is setup, and is also why typically most companies have splits, because as a result the share price decreases, allowing more people the opportunity to purchase the stock. The most common split is 2 for 1, so you get 2 shares for every 1, and lets say stock XYZ is trading at $50 a share, the stock price would then drop to $25.

A great example of a extremely expensive stock, check out Berkshire Hathaway (BRKA), the stock closed today at $107,360 a share! Not many people can afford even one share of this company and as a result cannot buy one. BUT, sometimes stocks are so expensive (like BRKA) that they issue B class shares that are substantially cheaper.

Sorry this is a lot of information, but I hope it helps you out. The bottom bottom line is that you have to buy atleast one share of any stock, you cannot buy fractions. A great question $smokin, nice one!

EDIT 02-23-07: It seems that you can apparently buy portions of shares, read below for more. Very interesting.

[aquaswim47]

Sharebuilder isn't an option in your case; it costs $25 per year and it costs an average of $10 per trade ($4 to buy and $15.95 to sell).

[gijoe9]

The only way to get a fractional share is in a divdend reinvestment plan (DRIP) but you must own one share before you can enroll in a DRIP. There are plenty of companies who have DRIPs but not all and companies that do not issue a dividend will not have a DRIP and not all companies that do have a dividend offer a DRIP. I do not know how share builder works so maybe they sell fractional shares of any company. The way a DRIP works is the company issues you shares instead of cash so say you get $10 in dividend for XYZ and it traded at $50 you would receive .2 of a share instead of the cash. The fraction will go to four decimal places and in some cases the fractional portion of your account may not receive a dividend it depends on the plan but if you liquidate your shares the fraction is counted.

I hope this helps

[aquaswim47]

Sharebuilder is a legitimate site, but it's expensive. They have almost no customer complaints. It costs an average of $10 per trade and $25 per year (don't know if that applies just to IRA accounts). They offer plans that save you from paying $4 to buy the trade; it's not worth it. They get very few customer complaints by the BBB. I've contacted them and their customer service 15 months ago was above average in quality. That way you can buy with fractional shares. Like with Fidelity, there's a $50 closeout account fee, as well.

Buying Fractional Shares: https://www.sharebuilder.com/sharebu..._PSSTR001.aspx
ShareBuilder: Build Your Future
BBB Report: Better Business Bureau
Fee per Trade https://www.sharebuilder.com/sharebu..._PSSTR002.aspx
How trading works (it's different) https://www.sharebuilder.com/sharebu..._PSSTR004.aspx
Full Fee Schedule: https://www.sharebuilder.com/sharebu...s/Default.aspx