Some of Robinhood's top 100 stocks carry some pretty steep share prices. In fact, the six most expensive --Amazon, Alphabet Class A, NVIDIA, Netflix, Zoom, and Tesla -- would've cost you a whopping $6,807 as of the close of trading on Monday, Oct 19. 2020.
It's easy to see why these are popular stocks. Amazon dominates the e-commerce marketplace; Alphabet is Google's parent company; NVIDIA invented GPUs used to create graphics on electronic devices; Netflix enjoyed first-mover status in the streaming video industry and remains a dominant player; Zoom has become the primary means of communication for millions amid a pandemic; and Tesla made electric cars cool.
Of course, you shouldn't buy shares in these or any other companies just because they're popular. And you can't assume each one is necessarily worth its high share price. But if you've done your research and feel some or all of them fit well into your investment portfolio, it may be frustrating to feel you can't afford to buy simply because of their high per-share prices.
The good news is, you don't actually need anywhere near $6,807 to purchase all six. In fact, with just $6.81, you could buy them all.
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How to score "expensive" stocks at a fraction of their share price
Buying all six of these stocks, or buying any one of them individually, can set you back only a few dollars with many brokers now allowing you to buy just a small portion of a share -- sometimes as low as .001 of one. With fractional shares, you simply acquire a stake based on the dollar amount you have available, even if you can't buy a full share.
With Amazon, for example, instead of buying a full share at $3,207.21 on Oct. 19, you could've bought .001 of a share for $3.21 total. If it's the right investment choice for you, you could do the same with each of the six most expensive stocks Robinhood investors love. The total cost of purchasing .001 share of each would add up to just $6.81, compared with $6,807 for full shares of all six.
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Although buying fractional shares will cost you far less than full shares, the performance of your investment won't be affected by the fact you bought a smaller stake in each company.
When an investor purchases any number of shares, they buy a fraction of the total outstanding number of shares the company has issued. Investors who buy fractional shares just purchase a smaller stake. You'll still make the same percentage gains as other investors; if the combined share prices go up 10%, your $6.81 investment would also appreciate 10%, making you around $0.68 while full-share investors would earn $680.70. Plus, you'll be paid dividends the same as any other investor, with the amount you receive based on the percentage of shares you own. With most brokerages no longer charging commission, these small transactions shouldn't come at any cost beyond what you're paying for your portion of a share.
Thanks to fractional shares, the size of your wallet no longer puts you at risk of being priced out of buying these or other hot stocks just because of their high share price. You can develop your comprehensive investing strategy without regard to whether the per-share cost of investments is out of your budget and buy shares in companies that make sense for you.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Christy Bieber has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Amazon, Netflix, NVIDIA, Tesla, and Zoom Video Communications and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool has a disclosure policy.