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The stock market in general has had quite a year. The S&P 500 index is up nearly 20% so far this year, and more than 100% since the market crashed last March.
Nvidia (NASDAQ: NVDA), a technology company known for its graphics processing units (GPUs), has also had an incredible year. Its stock price has soared by nearly 70% since the beginning of 2021, and some experts believe it has even more room for growth.
Currently, Nvidia’s stock price hovers around $220 per share. However, there’s a way to invest for as little as $1 per share — even if the company continues growing. Here’s how.
Image source: Getty Images.
How to buy quality stocks at bargain prices
Investing can be expensive, especially if you’re buying individual stocks. But there’s a relatively easy way to invest in high-quality stocks for just $1: fractional shares.
Fractional shares are small slices of an individual share of stock, and they’re less expensive than buying full shares. Rather than buying one full share of Nvidia stock for $220, for example, you can buy a fractional share for $100, $10, $1, or however much you can afford to spend.
One of the biggest advantages of buying fractional shares is that you can build a diversified portfolio full of strong stocks without breaking the bank. A well-diversified portfolio generally consists of at least 10 to 15 stocks from different industries. If you’re paying hundreds (or sometimes thousands) of dollars for a single share of stock, it can be incredibly expensive to create a well-diversified portfolio.
By investing in fractional shares, though, your money will go a lot further. You can easily invest in dozens of different stocks for under $100, making this one of the most affordable ways to invest.
Are fractional shares right for you?
Fractional shares can be an affordable way to invest in expensive companies, but they aren’t right for everyone. Although they are less expensive than buying full shares of stock, they still require the same amount of research.
Not all stocks are good investments, and it can be tempting to buy stocks from shaky companies because you can invest for less with fractional shares. However, a bad investment is a bad investment regardless of how much you’re paying for it. So before you buy shares in a company, make sure you’ve done your research to make sure it’s a solid stock.
Also, keep in mind that the fewer shares of stock you own, the less you’ll earn. Even if your stocks are soaring, if you only own, say, one-tenth of a share of stock, you won’t earn as much as if you’d owned a full share. This isn’t necessarily a bad thing, but you’ll need to continue investing consistently if you want to earn as much as possible.
As long as you’re choosing the right investments, fractional shares can be a fantastic option. Whether you’re buying Nvidia or any other stock, fractional shares can make it easier to buy the very best stocks at lower prices.
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Katie Brockman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Nvidia. The Motley Fool has a disclosure policy.
