How to invest in the stock market
Without diving into fundamental analysis, a good investment in a company’s stock involves choosing a company that provides the necessary services. If you find yourself using Facebook or Instagram every day, or using their services to market your business, you’re not alone. Today, 3.51 billion people actively use Meta products on a monthly basis. Some businesses depend entirely on advertising through social media. This is why we consider Meta (the parent company of Facebook and Instagram) a good investment option.
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Investing in Meta stock, which is currently priced at around $130, may not be feasible for everyone as buying more than one share is necessary to make significant profits. Fractional units offer a solution to this problem. With Olymp Trade, you can purchase one fractional unit of Facebook for only $1.30, making it easier for beginners to enter the market. This feature can also benefit experienced traders and investors who are looking to diversify their portfolios and improve their asset management strategies.
How to start trading shares as fractional units
Olymp Trade is intuitive and easy to use even if it’s your first time on such a platform. When on Olymp Trade, you can access fractional units from Stocks mode. Step-by-step guide:
- To start, choose an asset and in the left window, you will see three options at the top: Fixed Time, Forex, and Stocks. Go to the Stocks section to proceed.
- A list of available stocks will appear, and you can narrow it down by region: Asia, Europe, or USA. For now, let’s leave the full list of stocks visible.
- The list shows stocks that can currently be traded because their stock market is open. Below the stock name, you will see the price per share, and to the right, the minimum purchase amount. Choose the stock you want to purchase by clicking on it.
- When you select a stock, its price chart will take up the main screen and its information will expand. If the stock’s market is currently open, the “Buy” button will appear on the right side of the chart.
- When you’re ready to purchase fractional units of the stock, click on “Buy”. A pop-up window will appear, where you can buy parts of the stock by either entering a dollar amount or the quantity. The amount you choose to invest is entirely up to you. The system will then automatically calculate the number of units you can buy based on the value you’ve entered. This calculation can be seen in the “Amount ($)” field.
- If you prefer to purchase by quantity, you can enter the number of units of the stock you want to buy. The price per unit can be seen under “Quantity”. Simply choose the desired quantity of the stock and click “Buy”.
- Great job! You now own at least 0.01 units of the stock. A “Purchase Complete” window will appear with all the details of your trade. You can view information about your purchase in the “Portfolio” tab in the “Trades” window. This tab allows you to manage your investment portfolio, buy more assets, or sell your existing ones.
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Dollar-cost averaging
A straightforward approach is to allocate a fixed amount of funds each month for stock investment, known as dollar-cost averaging. This method is an effective way to invest and is widely used by retirees in the US for their retirement savings. Without fractional shares, you need to save up the entire amount to buy one share, causing idle capital in your account until you have sufficient funds.
While some of the top-performing stocks are currently pricey, constructing a diversified portfolio can cost over $10,000. However, with a dollar-cost averaging strategy that includes fractional shares, you can invest even small monthly amounts. Keep in mind that investing is a long-term commitment that yields results when adhered to consistently.
Getting started
As you can observe, purchasing and selling fractional shares is straightforward. This approach is particularly useful for investors who have limited funds, as well as experienced investors looking to diversify or reduce risk. By investing in fractional units of shares, you can create a portfolio that may not have been attainable otherwise. However, it’s crucial to manage risk carefully and to utilize technical analysis tools to inform your investment decisions.
Starting out as a trader can be overwhelming, especially for someone new to investing. That’s why education and support are critical for a beginner’s success. Olymp Trade makes it easier to get started by offering fractional units, lowering the cost of entry into investing. We support our traders by providing a variety of helpful tools, including free webinars and guides, to help them learn, trade, and grow. Give it a try today and start your journey to financial independence!
