Fractional trading is a great way for young people to get started in investing, said Kalee Boisvert, investment adviser at Raymond James Ltd.
"I thought that you had to have a lot more money to start and I didn't start until much later," she said. Looking back, she realizes how much she missed out on in terms of compounding because she delayed her investing journey. Fractional trading has been around for a long time and is fairly common on do-it-yourself trading platforms such as Wealthsimple or Robinhood.Last week, TD Direct Investing launched fractional trading to allow customers to buy and sell fractions of stocks and exchange-traded funds for as little as $5.
When it comes to selling fractional shares, it's similar to selling a whole share, except investors can put the exact dollar amount they'd like to get from the sale instead of the number of shares, said Boisvert. "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.
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.