Jiří Filip Commercial message: Imagine being able to buy a stock or an exchange-traded fund (ETF) worth €2, even though you don't have enough financial capital at the moment.
E.g. with XTB it is now possible thanks Fractional shares. These allow you to buy your favorite stock or ETF in parts if you cannot afford to buy it in full. It's very simple, so you can buy more shares with less capital and fill your investment portfolio at your own pace.
If you want to know all features and benefits of Fractional Shares, which you can use when investing, continue reading our article.
How do Fractional Shares work?
In 70 seconds we will explain everything you need to know about fractional shares. YouTube video: Manual for Fractional Actions.
How to invest in stocks using fractions?
Buying stocks and ETFs using fractions is as easy as a classic stock purchase, but with the advantage that you can adjust the size of the order according to the amount you invested, not according to the number of shares. Just enter the amount in euros (or other currency you use) that you want to invest in the "order window" and the amount of shares in the order will be adjusted automatically. You can also buy fractions of stocks or ETFs by customizing the number of shares (eg 0,03 SXR8, an ETF that tracks the S&P 500 index) in the order window as if they were whole shares.
What are the advantages of fractional shares?
The fact that you can invest in stocks using fractions makes your money in XTB more efficient by increasing your diversification capacity. For example, if we wanted to invest €50 every month in a company like Microsoft, which is trading at $308, we would have to wait almost six months before we could buy a share. Now, with the help of Fractional Shares, you can make this investment today and for an amount that will suit your needs. As a bonus, you can get dividends paid even if you only own a fraction of the stock.
For example: How much would it cost us to invest in a balanced portfolio of US technology companies?
Let's imagine that we want to diversify the portfolio by buying four large American technology companies, and we invest €10 per month in each of them.
What would be the difference in the monthly investment without Fractional Shares vs with Fractional Shares, we can see in the table below:
By using Fractional Actions, we were able to reduce the minimum capital needed to be able to invest in a balanced way in the four largest US technology companies, and that by a full 95%
No more excuses why you can't invest in your favorite stocks every month!
What is the difference between Shares, Fractional Shares and CFDs?
Discover all the differences between these products in the following summary table:
How do XTB's Fractional Shares and Fractional ETFs differ from other competitors?
Very simple. For starters, Fractional Shares and Fractional ETFs at XTB they are not derivatives, they are simply a new way to buy your favorite stocks or ETFs, where the number of titles you have doesn't matter so much, but it does matter the amount you want to invest.
From the moment you buy a fractional share of a stock, you are also entitled to dividends paid by the company, viz in proportion to the fraction you own. For example, if you buy 0,25 shares of AENA, which pays a dividend of €2, you will receive €0,50 (€0,25 x €2 = €0,50).
In addition, if after summing the fractional shares you reach a total of one whole share, XTB automatically consolidates these fractions and within 48 hours he will provide you with a complete one share, which he will deposit in your account, at which time you will receive all the rights that a shareholder has.
What shares can I buy now from €10?
There are more than 800 stocks and more than 125 ETFs available to buy in fractions, and more are being added gradually.
Examples of available ETFs:
iShares NASDAQ 100 —- €730
iShares Core S&P 500 — €404
iShares USD Treasury Bond 7-10yr — €165
iShares Core EURO STOXX 50 — €156
iShares Core DAX — €136
You can see the full list of stocks and ETFs you can buy in fractions here: Instrument specification table
How much does it cost to invest in Fractional Shares and Fractional ETFs?
Fractional shares, which are a new way of buying shares, are also included in the 0% rate, which allows you to invest up to €100 in nominal value every month in fractional shares and fractional ETFs without paying commission.
