The basic investing rules still apply—so do your own research
Marques warned trading, whether whole or fractional, isn’t for everyone—especially those who can’t make time to research a company before buying.
“Although it makes (trading) easier to do so fractionally with a smaller budget, that takes a lot of research,” Marques said.
“In many cases for your average Canadians who may not have the time or the interest or the expertise in researching companies or taking this kind of a gamble on just one company, it’s still more appropriate to work with managed portfolios,” she suggested.
The basics of investing still apply to fractional investing, Boisvert said, such as keeping in mind your time horizon and risk tolerance.
For instance, if you have a goal to put a down payment on a home in the next year, the investor shouldn’t be putting that money into equities that can be volatile in the short-term, she explained.
Instead, rely on tried-and-true investment concepts like diversification, which is also easier to achieve with fractional units, she said. Fractional shares also make it more accessible to purchase stocks at various price points, especially when the purchases are spread across months.
It’s important to not put all of your eggs in one basket, and have no more than 5% of a portfolio in any one holding, Boisvert added.
“When we’re talking about buying units of shares, keep in mind to avoid FOMO (fear of missing out),” Boisvert warned.