Buying Stocks in Revolut: How to Buy a fraction of a stock on revolut
Fractional shares allow investors to purchase a portion of a company’s stock, rather than buying whole shares. This democratizes investing, making it accessible to individuals with smaller budgets.
Here’s an expanded explanation with a focus on practical examples:
Concept of Fractional Shares
Fractional shares enable you to buy a part of a share of a high-priced stock, aligning with your budget. For instance, if a stock is priced at €1000 and you have only €100 to invest, you can buy 10% of a stock unit. This flexibility opens up opportunities to invest in expensive stocks without needing substantial capital.
Step-by-Step Guide to Buying Fractional Shares on Revolut
1. Set Up Your Revolut Account
- Download the App: Install the Revolut app from the App Store or Google Play.
- Sign Up: Complete the registration by providing personal information and verifying your identity.
- Upgrade to Premium/Metal Account: Fractional shares trading may require a Premium or Metal account. Upgrade your account if needed to access this feature.
2. Deposit Funds
- Add Money: Transfer funds into your Revolut account through a bank transfer, debit card, or other supported methods.
- Currency Exchange: If required, convert your local currency into USD or EUR, depending on the currency used for stock trading on Revolut.
3. Navigate to the Trading Section
- Access Trading: Open the Revolut app and go to the ‘Wealth’ or ‘Trading’ section.
- Explore Available Stocks: Browse the list of available stocks and ETFs.
4. Choose the Stock
- Search for a Stock: Use the search functionality to find the specific stock you want to invest in.
- View Stock Details: Click on the stock to see details such as the current price, historical performance, and news updates.
5. Buy a Fraction of the Stock
- Select ‘Buy’: Click the ‘Buy’ button for the chosen stock.
- Enter Investment Amount: Instead of specifying the number of shares, enter the amount of money you wish to invest. For instance, if the stock is €100 per share and you invest €20, you will acquire 0.2 shares (20% of a share).
- Review the Order: Double-check the order details, ensuring you are comfortable with the fractional share you are about to purchase.
- Confirm the Purchase: Confirm the transaction to execute the order.
6. Monitor Your Investments
- Track Performance: Use the app to monitor the performance of your fractional shares and overall portfolio.
- Set Alerts: Set up notifications to stay informed about significant price movements or other relevant updates.
7. Sell Fractional Shares
- Select ‘Sell’: Navigate to your portfolio and select the stock you wish to sell.
- Enter Sale Amount: Enter the amount of money or the fraction of the share you want to sell.
- Review and Confirm: Confirm the sale details to complete the transaction.
Practical Example
Suppose you want to invest in Company XYZ, which trades at €500 per share. You only have €100 to invest. Here’s how it works:
- Investment Amount: €100
- Stock Price: €500
- Fractional Share Calculation: €100 / €500 = 0.2 shares Thus, you own 20% of one share of Company XYZ. If the stock price increases by 10% to €550, your investment value also increases by 10%, resulting in a new value of €110 for your 0.2 shares.
Benefits of Buying Fractional Shares on Revolut
- Accessibility: Enables participation in the stock market with limited funds.
- Diversification: Allows for a diversified portfolio by investing small amounts across multiple stocks.
- Flexibility: Invest exact amounts based on budget and preferences, rather than being constrained by whole share prices.
Considerations
- Trading Fees: Be mindful of any fees or commissions associated with fractional trading on Revolut.
- Market Hours: Trades are executed during market hours, which may vary based on your time zone.
- Investment Risk: All investments carry risks. Understanding the market and being aware of potential losses is crucial.
