what is buying a fraction of a share from a company means and how does that generates me money


what is buying a fraction of a share from a company means and how does that generates me money

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A share is literally a share of ownership of the company. It’s not very much, but among other things, it entitles you to a share of the company’s profits.

So, when a company declares that it’s paying a dividend, it will say “Okay, we’re paying $X per share,” and that’s how much you’ll receive by virtue of owning part of the company.

It’s just sort of a gimmick to get small investors onboard.

If you buy like 0.27 of a share, they honestly just sort of pretend to own it for you, they’ll have like 20 people owning like 25.32 ‘fractional shares’ so they’ll just buy 26 shares and its close enough, if they lose or gain a couple dollars who cares.

You generate money same as any other stock, but some stocks, like Amazon are like $2,200 a share.

So if you only have like $300, you can buy 0.14 shares or whatever and next month buy a little more, little more and accumulate it.

Makes it accessible to people.

The reality is too, formerly you could actually only buy shares 100 at a time, and people buying less were ‘odd lots’ and got worse prices.

So it’s really moved a lot to make it more reasonable for lower wealth people to get involved, but often at the cost of hidden fees or sub-optimal prices.

It’s just like owning one share, if the value goes up you can sell it for a profit. And if they do a dividend you’ll get a portion of that dividend depending on how much of a share you have.

Buying a share is buying a very small part of a company.

As a simplified version, a company could choose to sell a certain amount of their ownership, so they will split the company into a certain amount of shares.
If a company chooses to do this and creates 100 shares for example, buying one of those means you now own 10% of that company.

What this means is that you now have a share in the profits and losses of that company – if they do very well your shares become worth more and you can sell them on to someone else for a profit, but equally is the company does poorly they may lose value.

It also means you may also earn sooner of the profit a company makes – some of their profits will be periodically returned to investors in the form of a dividend, which is a cash payment to investors based on how many shares they own.

An additional benefit is control over the actual running of a company – if you own a significant percentage of that company, that gives you a certain amount of control over the operations of that company. Often this control will be delegated to a board of directors, but it can be important in stone big decisions, and is one reason why you will often see the original owners of a company retaining at least 51% of the available shares – it means that if an issue needs to be voted on, they still control a majority of the votes.

Of course in reality very few people will be buying significant percentages of a companies shares – tend of thousands of dollars worth of shares will be a tiny, tiny percentage of the overall company and so your control will be very limited, however things like profit sharing through dividends are still a feature, and while you won’t have direct control over the company decision making, companies will hold annual general meetings where all of the interested parties can meet up to report on the condition of the company, give operational updates and vote on relevant decisions.

The main ways of profiting through shares for someone who doesn’t care about the actual running of a company mainly come down to earning periodic dividend payments through the shares they own, and the ability to sell a share at a profit when is company grows

A share is a somewhat arbitrary and antiquated abstraction for owning X percent of a company. A fraction of a share is a fraction of a percent. Companies need to decide how many shares a company has to allocate ownership. There are different classes of shares (for example, preferred shares which allow early investors to cash out before other shareholders during an IPO)

When you buy a fraction of a share from a company, you are buying a partial ownership stake in that company. This can generate money for you in two ways: through dividends paid out by the company, and through the appreciation of the company’s stock price.