How Fractional Shares Purchase Works?

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How Fractional Shares Purchase Works?

We continued our conversation, which was left unfinished last week, with Successful Businessman Metin Liçis. This week, Young Businessman MEtin Liçis explained “How Fractional Shares Purchase Works?

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He emphasized the necessity of dealing with brokerage firms that offer fractional shares services for partial share purchases.

He mentioned that this service is provided through brokerage firms authorized by the SEC in the United States, and when fractional shares are purchased, investors can invest in the desired amount by slicing the stock into slices.

Liçis mentioned that fractional shares are written and held in the investor’s name, and they do not become shareholders. He explained that the sale of partial shares occurs through market orders and limit orders cannot be used.

He highlighted that this feature allows individuals with small savings to make low investments.

Fractional Share Purchase and Sale

He said that it stands out as a suitable option for those who do not have large investments, especially for investors who want to invest in expensive companies or diversify their portfolios.

Partial share purchase makes the investment world more accessible to everyone and is a great motivation for small-scale investors, he added.

Are Dividends Given in Fractional Share Purchase?

In partial share purchases, he said that investors have the right to receive dividends just like regular share purchases, but the amount of dividends may vary depending on the proportion of partial ownership.

For example, if the dividend amount in a full share is $10, a person who owns one and a half fractional shares can receive $15 in dividends.

Stock Split

In the event of a stock split, he explained that the company divides its shares according to a certain ratio, reducing the price per share while keeping the total value constant.

For example, in a 1-for-2 stock split, the number of shares owned increases according to the split ratio. If there are 1.5 shares before the split, there will be 3 shares after the split, but the total value of the shares remains unchanged.