When it comes to this "fractional shares", I always see it as one of those things that make sense in theory, but when it's time to be practical, it might not work out well. Because of that, I just assume it's me who doesn't know how the fractional share and the stock market entirely really work.
From the article posted:However, this is changing as significant brokerage firms make it easier to buy fractional shares directly. This change allows you to specify how much money you want to invest in a company instead of how many shares you want to buy, and you can buy a tiny piece of a share if your financial investment isn’t enough to buy a whole one.
The average increase of a stock price yearly is 10%, so how much are you going to make with your fractional share in a year?
Let's assume the share price is $1000 and you buy 20% of that as a fractional share share which is $200. If there's a 15% increase in the share price at the end of the year, that's just about a $30 profit after a whole year. Even if you want to hold it for a long time, the profit at the end of those years won't be worth the time. Certainly, there can be other investments that can give you more than that in that same period.
Buying a single share is not that profitable, not to mention buying fractional shares.
This is why
I need someone who understands the stock market to explain this better to me if I'm getting it wrong.