Thanks to “stock slices”, you can invest with any dollar amount! I’ll show you how to use these to invest in any company regardless of the cost of its stock. One share of Amazon is over $3k so if you are just starting out and trying to diversify, you might not be able to buy […]
Thanks to “stock slices”, you can invest with any dollar amount! I’ll show you how to use these to invest in any company regardless of the cost of its stock. One share of Amazon is over $3k so if you are just starting out and trying to diversify, you might not be able to buy Amazon if it weren’t for stock slices.
“Stock slices” are a clever way to say fractional shares. They allow you to buy a slice of a company’s stock vs the entire stock. This is really helpful when you want to get started with investing and some individual stocks you are interested in are priced too high to buy.
Here’s a breakdown of a few popular stocks and their prices: Apple $390, Tesla $1,595, Facebook $243, Google $1,555, Netflix $496.
So how do fractional shares work? The brokerage firm where you buy the slice from owns the entire stock and then they allow you to buy a portion of it from them. If you need a breakdown of how stocks work, take a look at this quick video for a simple explanation.
Every brokerage firm is constantly trying to increase its client base. They want to have the largest number of accounts opened as well as the most amount of money deposited into their firms, so the more features like stock slices they offer, the greater the chances of achieving this and winning your business.
One question I get is, “How do dividends work with stock slices?”
If you buy a stock that pays a dividend like Verizon which pays about 4.3% then you will receive this in proportion to what you own.
The two firms we will talk about today are Schwab and Fidelity.
They both recently started offering Stock slices. Both are a great option, so I would suggest going into both of their websites and see which one you find easiest and most fun to use. Here is a summary of the differences I think are important to note.
Fidelity allows you to buy over 7k US stocks or ETFs, if you need help learning investment terms like the differences between a stock and an ETF take a look at this video where I walk you through that.
Schwab limits you to the 500 stocks listed on the S&P 500.
Fidelity allows you to purchase slices starting at $1 and Schwab’s slices are sold in $5 increments. Fidelity requires you to use their app to purchase the slices while Schwab doesn’t have this restriction.
I like the idea of having set increments that Schwab requires because you can hold equal ownership of different stocks. You can do this with Fidelity, but you just have to keep that in mind and buy the same amount in each stock you choose if you like the idea too.
Fidelity does have a lot of freedom since they allow you to buy most stocks as well as ETFs vs. being limited to the S&P 500 list and you can start with $1 vs $5. The one drawback of fidelity is their requirement to use the app to buy slices. This may not even be a drawback though if you plan to trade on your phone regardless and it may change in the future.
Don’t get hung up in over-analyzing where to invest. Both firms are excellent and both will offer very similar features. If you just can’t make a choice, flip a coin and go with that. It’s better to get invested than getting hung up on the details like where to invest. You can always move your account later if you find something you like better.