The Ministry of Corporate Affairs (MCA) and the Securities and Exchange Board of India (SEBI) are exploring the possibility of introducing the concept of fractional shares in India. In the US, fractional trading is allowed and you can invest in a portion of a share rather than a whole share.

The concept of fractional shares has the potential to change the investment landscape for retail investors. Introducing fractional shares will impact the Indian stock market. As the name suggests fractional shares represent a portion of the whole share of a company.

Traditionally the investors had to purchase the whole shares. However, the proposed change of introducing fractional shares in India will allow investors to invest in expensive stocks with limited funds.

If there is a regulatory change then investors will be able to buy fractional shares in India. This way you will not be constrained to buy a whole share of a high-value stock. Instead, you can invest an amount corresponding to the fraction of the share.

How do fractional shares work?

The fractional shares work by dividing the value of shares into small units. For example, if you want to buy a stock but the price is Rs. 2000 then you can invest Rs. 1000 to own half the share. This flexibility will allow the investors to diversify their portfolios with smaller amounts of money.

Owners of fractional shares are entitled to receive a dividend proportionate to the fraction they own. If a company pays out dividends then your ownership of fractional shares will result in a corresponding payout.

You can easily buy fractional shares just like the whole shares in the stock market. This gives you the flexibility to manage your portfolio.

Fractional shares offer many advantages to new investors. It enables them to invest in high-value stocks without the need for a large initial investment. This approach can lead to a more balanced and diversified portfolio with limited money.

The introduction of fractional shares in the Indian stock market is a positive step towards accessibility and inclusivity. It will also open a door to flexible and diversified investment journeys. Fractional investing can be a game changer and allow investors with limited funds to participate in the stock market.

Online apps

Most brokers now provide trading apps that offer online trading and global investing. Appreciate offers an app that allows you to trade in fractions in the US stock market. You can invest in the stocks of the top companies. You can buy stocks depending on how much your budget allows.

You can invest in the stocks of the highest-returning companies with any budget. The app uses AI algorithms to guide you in investing based on your portfolio. The app uses state-of-the-art security measures so you can trade without any worry. The app monitors all the activities 24x7 and uses AI-enabled auto-flagging of suspicious activities.

The author is a blogger and likes to blog about the various investment options available in the stock market. Currently, the author has discussed the topic - fractional investing.