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Most popular long- and short-term investment methods

Posted on by siolla. Team

We may know the investment options available, but we don’t know how to decide which  investment methods suit our ability and financial goals. Those interested in the investment field often start with the most common types of securities like stocks, bonds and mutual funds.

Stocks and bonds are usually the main strategies for building an investment portfolio, due to the difference in their performance which is related to the performance of global markets. Investors take advantage of this difference to achieve their investment goals. Below is an overview of these different types of investments, where and how you invest in them, and how this thing will reflect in your investment portfolio.

Forms of investment

Stocks

Buying a share means buying a small piece of ownership, or a share in a company. In general, stock prices rise and fall based on investor demand. Most of the time, the more people want to buy a particular stock, the higher the price is likely to be and when fewer people want that stock, the price goes down. Thus, you can sell the share you bought at a higher or lower price.

You can make money from stocks by selling your shares at a price higher than you paid for that stock, but consider that stock prices can be volatile, which means they may rise and fall quickly.

Investor demand and stock prices change for many reasons, for example, good news such as strong sales numbers or the reveal of a new common product may raise stock prices. Bad news, such as product safety problems or weak revenue figures, may cause stock prices to fall.

After the price drops, it may take some time for the stock price to return to its original value. This is one reason why stocks are often held as a long-term investment.

However, not all successful investment strategies involve holding stocks for long periods. Investors may use different investment strategies to generate returns in the short term, such as selling shares publicly.

In this strategy, the investor borrows the shares and sells them within a short period, then buys them again at a lower price, thus returning the shares to their original owner, and the investor keeps the difference in price as a profit.

And you can make a return on your investment through dividend, which represents a share of the company’s profits. Companies with predicted (steady) revenues and expenses choose to divide a portion of their profits among shareholders as regular dividends during the year.

Dividends make stocks more desirable among investors, because consistent dividends are a sign of steady profit. And since the price of the shares rises along with the rise in demand for them, we can develop the returns from these profits in two ways: either by paying investors in cash or by increasing the share price and returns over time.

Bonds

Bonds are securities with interest issued by companies or governments, which enable investors to buy them for a specific period of time.

A bond is a form of debt, where the issuer is a creditor to the owner of the bond. In this case, you “loan” money to the issuer by purchasing the bond, and in return for this loan the company or organization pays you interest and pays back the original loan amount at maturity date. Generally, interest is paid regularly in the form of a ‘coupon’.

Bonds consist of three basic components:

  • The price of the bond.
  • The interest rate used to calculate your coupon.
  • The income or return that the investor receives between the time of purchasing the bond and the maturity date.

The interest rate remains the same throughout the period of the bond, while the price of the bond is affected by the changes of interest rates in the financial system.

These price changes occur because bonds become more or less desirable to buy from other investors based on several factors, including current interest rates and the profit that another investor could get when buying a new bond.

When interest rates fall, older bonds that pay higher coupons may become more interesting to investors, causing their prices to rise.

The opposite happens when interest rates rise, the price of older bonds paying lower coupons generally falls. It is important to remember that in either case, the interest rate that you get for the bond is fixed.

Stocks and Bonds: What are the risks and profits of each?

In the long run, stocks may offer higher profits than bonds. Since 1926, big companies’ stocks have returned an average of 10% per year.

for 2020 and after, the expected compound return for large popular stocks is expected to be around 4%. But because stock prices can be volatile, it is a riskier investment than bonds.

As long as the bond issuer doesn’t default, you’ll get a fixed return throughout the period of the bond, in addition to paying off your capital, which is one reason bonds are called “fixed income investments”.

But the lower risk associated with bonds means lower long-term returns compared to stocks. Bonds issued by private companies, or corporate bonds, vary in quality depending on the issuer’s ability to pay on time. In most cases, high-quality corporate bonds pay more interest than government bonds, although well-established companies are less likely to default on their payments.

On the other hand, companies that have a track record and intention to default, often issue bonds at significantly higher interest rates. While these bonds provide a high return to investors, the chances of investors getting all of their payments are very slim.

How to build a portfolio of bonds and stocks?

While it is possible to buy a stock or a bond, many people choose different types of investments that help them build a more diversified portfolio.

This strategy is called “diversification”, and it is a form of investment that helps investors disturb the risk of poor performance among multiple securities.

That way, if a particular company or industry runs into trouble, other, more successful companies or industries can help balance your returns.

Different types of investments

mutual funds

A mutual fund is a collection of investments selected by fund managers. When you buy a share in a mutual fund, you are buying a share of the portfolio, and buying a share of the portfolio means that you are buying a small part of the shares or bonds in the fund itself.

The prices of mutual funds are calculated at the end of each business day, and it depends on the total value of the securities in the portfolio divided by the number of outstanding shares in the fund. This price changes based on the value of the securities held in the portfolio at the end of each day.

Exchange Traded Funds (ETFs)

ETFs are a form of investment similar to mutual funds, but it behaves like individual stocks, with ETF shares being traded all day long. As a result, the share price of an ETF can change throughout the day depending on stock market demand.

index funds

Investment experts that use mutual funds and ETFs typically have a strategy to take into account, which is to invest in a variety of stocks or bonds with comparable properties, such as major companies, small companies, or companies in a particular industry.

Index funds are a type of mutual fund or ETF with a portfolio created to mimic and track major indexes of stocks or bonds, such as the S&P 500, the Dow Jones Industrial Average, or the Bloomberg Barclays Aggregate Bond Index.

These funds are not actively managed by investment experts. As a result, investing in shares of these funds often costs less than investing in actively managed mutual funds and ETFs.

How do you get started in different types of investments?

Setting goals is the first step to determine what type of investment options you should choose. Broker accounts are good for short-term investment goals because they provide easy access to money. Retirement accounts are best for long-term goals as they don’t permit easy withdrawals.

If you wish to invest in stocks, bonds, or funds, you will need to open a brokerage account or other specialized accounts, such as a 401(k) or IRA.

Our mission as “Siolla” is to guide you to make the most of the various investments, to ensure you a bright financial future!

How does passive investing work?

Posted on by siolla. Team

The goal of passive investing is to steadily increase wealth by purchasing securities and holding them for a long time. And it aims to avoid the costs and risks associated with frequent trading.

 It is better to invest time in the market rather than attempting to time the market because it is assumed that the market makes positive returns over the long term. Index funds, which can include mutual funds and exchange-traded funds (ETFs), are the main elements of a passive investment strategy because they are created to mirror the performance of market indices.

How did the concept of passive investing appear?

Jack Bogle, the founder of The Vanguard Group, introduced the index fund in 1975. Index funds, often known as passive funds, changed the market by allowing average investors with brokerage accounts to compete with experts. When index funds were first introduced, mutual funds were the main platform for passive investment.

Since then, ETFs have become the most popular type of fund. Today, about 71% of investors agree that passive investing is better than active investing to increase long-term market returns. 

What is the difference between active and passive investing?

As the names suggest, active investing requires a more hands-on approach, while passive investing requires less trading which means less buying and selling of stocks and other securities.

Active investing comes with a lot of risks, since investors must estimate how stock prices will change from day to day, or even within a single day. This sort of investment can be more expensive because active investors pay higher transaction fees. Typically, this type of investment is designed for aggressive investors, who are trying to take advantage of short-term price swings in the market.

In contrast, passive investment is a long-term strategy. It might be a more economical way to invest, because there are fewer trades and hence fewer fees. With the assistance of a Robo adviser, passive investors often create a diversified portfolio, then they adopt a “buy and hold” technique resisting the urge to anticipate or react to market changes. Successful passive investment overcomes short-term losses by focusing on long-term gains and total portfolio performance.

What are passive investment strategies?

Passively managed mutual funds and ETFs are mutual alternatives. Because they are both diversified.Index funds are ideal for passive investing because they aim to replicate the behavior of indices such as the S&P 500, and these indices often reflect stable growth over time.

ETFs are unique in that they behave like conventional stocks in that they can be bought and sold on a stock exchange in the same way.

What are the pros of passive investing?

The foundation of passive investing is a diversified portfolio designed for long-term, modest growth. For novice investors, in particular, this strategy is typically a straightforward, low-risk, and affordable way to invest. Additionally, the buy-and-hold approach often avoids a hefty annual capital gains tax. Some advantages of passive investing are:

Passive investing is based on a diversified portfolio designed to yield small but steady gains over time. This method is usually a simple, low risk and lower cost of investment, especially for beginners. In addition, the “buy and hold” technique usually does not result in a huge annual capital gains tax.

  • Low maintenance.
  • Diversified investments.
  • Lower fees.
  • Less risk factors.
  • Stable returns.

Cons of passive investing

Some investors seek big gains in a short period of time. This is an active investment strategy, and one of its methods is to acquire a stock that has the potential to rise in value, then sell it before it falls. This strategy is risky, but it provides a return that exceeds market performance. If you consider yourself a risk-tolerant investor, you should be aware of the following disadvantages of passive investing:

  • Limited investment options.
  • Small gains in the short term.
  • No above-market returns.

What type of investor are you?

The key for choosing the best investment strategy for you is understanding your risk tolerance. Every type of investment has risks, including losing money. But you can determine what strategy suits you best, depending on your age, income, financial goals, and how long you plan to invest your money. And you might fit into one of these categories. 

  1. Conservative

It is to focus on financial stability even if it means small returns.

  1. Moderate

You’re probably looking for long-term growth returns, but you still want financial stability.

  1. Aggressive

You may want to maximize your long-term wealth, even if that means sacrificing short-term financial stability.

Discover your investment method

Investment strategies are adaptable, but it is best to understand the strategy before adopting it. You may prefer a passive, active, or both strategies. All of this is dependent on your desire for hands-on involvement (practical participation) and the amount of risk you are willing to take. The good news is that if you take one strategy and don’t succeed with it, you can switch to a different one that works best for you.

Passive investing often focuses on building wealth for future goals, such as in retirement. These questions can help you identify your long-term goals and how to reach them:

  • How much do you need to save for retirement?.
  • How much can your investment grow with compounding?.

How does passive investing in Siolla work?

If you have decided to start a long-term investment, Siolla can help you get started with passive investing. The first step is to create a diversified, customized portfolio to suit your budget and financial plan.

Siolla will take care of everything else once you add money to your account!.

What is investment and how is it important in the global market?

Posted on by siolla. Team

What exactly is an investment, and how might it benefit you in the future? When we hear the word “investment” a lot of questions pop in our mind, and here we will answer them all.

What is the investment?

Investing generally is a part of the economy that has contributed to the improvement and progress of societies. Investment is buying valuable assets, known as capital assets, which the investor buys with the expectation of either a potential increase in value or that it might provide a new source of income.

Investing in the stock market means buying securities, such as stocks, bonds, mutual funds, and exchange-traded funds (ETFs), in order to make money as their value increases over time. Investors build a portfolio consisting of various securities, and hold them for years or even decades. Traders, on the other hand, typically purchase and sell stocks quickly to make several tiny profits as their prices rise and their value changes in the market.

And if the idea of day trading frustrates you, rest assured that investing in general is much simpler and less complicated.

Why is investing so important for your future shares?

Many experts agree that investing is an essential component of a more productive financial future. Here are some of the most familiar reasons to start investing:

  1. Retirement

In 2021, many non-retired people had some retirement savings and had invested those funds. their nest funds have developed more quickly through investing than through saving alone.

  1. reducing inflation

Money’s purchasing power dwindles over time. For example, a $100 product in 1950 will cost more than $1,200 in 2022. Investors want returns that meet or beat inflation.

When should you start investing?

A rule of thumb in entrepreneurship says that “the earlier you start investing, the more wealth you can create.” How? Through the power of effectiveness compounding. (the power of multiplying money)

Consider investing $100 and receiving a 5% return each year. You would make $5 in the first year. The next year, after reinvesting those profits, you would receive interest on $105 for a profit of $5.25. Your balance and the return on that balance both rise each time you reinvest the money that you make.

The effect grows as your money accumulates over time. Consider starting with $100 and earning $25 a month for 20 years at an average rate of 5%. You would have made a deposit of $6,100 and your balance would be over $10,000 after 20 years. You would have made $15,100 in contributions for 50 years, bringing your balance close to $64,000.

signs that you are prepared to invest

In addition to learning how to start investing, it is best to determine if you are ready to invest. Here are some indicators that you are ready for investing.

  1. Disposable income

It may be time to invest your money if you can cover all of your expenses and yet have some money left over. Now is the ideal time to start budgeting if you aren’t already.

  1. Not indebted with a high-interest rate.

Let’s say you earn 5% on your investment, but you have a credit card balance with 18% interest. This will cancel out your return, so it may be wise to pay off high-interest debt before investing.

  1. An emergency fund

Have you saved enough in the last three to six months? If not, investing all of your money may compel you to liquidate immediately in an emergency, resulting in the loss of the money you have made from your investments.

  1. definite financial objectives

Saving and investing are important ways when it comes to setting the money aside for the future, each of them serves different purposes. Establishing goals and selecting the appropriate financial tools form a strong foundation to achieve them.

How much money do you need to invest?

Unlike what many people assume, you don’t need a large amount of money to start investing. You can start with a small amount of money. while stocks and other securities can be expensive.

And once you start investing, you’ll want to keep adding money to your accounts, especially if you have long-term goals like retirement. Many experts recommend investing 10-20% of your income. For example, you can follow the 50/30/20 budgeting strategy, in which you allocate about 20% of your budget for savings and investment.

Find out your investment approach

Every investor has a unique style that is influenced by many factors, and finding the one that suits you depends on your investment objectives, your budget, your risk tolerance and how you want your investments to be managed. But remember that investment plans are flexible and you can change your plan to suit your life circumstances.

Assess your risk tolerance

Every investment carries some risk, including the possibility of financial loss. The amount of danger that each person is willing to take varies. Your financial goals, age, income, and other factors all play a role, and so there are three types of investors:

Conservative

He is the one who prefers financial stability over the possibility of achieving higher returns. His asset allocation is likely to be 40% stocks and 60% bonds.

Moderate

Moderate investors aim for a balance between stability and the potential for higher profits. They usually allocate 60% to stocks and 40% to bonds.

Aggressive

Aggressive investors aren’t afraid to take huge risks in the hopes of getting great returns. Typically, they invest 80% in stocks and 20% in bonds.

Are you an active or a passive investor?

Focusing on short-term gains, hands-on active investors tend to spend a lot of effort maintaining the value of their portfolios and engaging in frequent trading. Active stock market participants may also attempt to outperform the market by selecting particular stocks that may outperform benchmark indices like the S&P 500. Due to frequent trading, active investing may carry more risks as well as higher expenses.

As for passive investors, they usually use the “buy and hold” strategy, where they hold their investments for long periods, and seek long-term profits. They often invest in index funds that aim to mimic the performance of the market in general. Many build a diversified investment portfolio, often with the support of a robo-adviser, so that losses in one area are offset by gains in other areas in order to minimize the risks of market swings. Passive investing is usually recommended for long-term purposes like building wealth for retirement.

Different ways to invest your money

Investors have several accounts and assets to select from, each with its potential and restrictions. You don’t have to select only one method. It’s common for people to have many investing accounts for different purposes, so it’s crucial to diversify your portfolio with different investments.

Types of investment accounts

Choosing the appropriate type of investing account can help you get the benefits that you need. Depending on your goals, you can choose a standard brokerage account, a tax-advantaged retirement or educational savings plan.

Types of investments

There are so many investment options, such as stocks, bonds, mutual funds, or ETFs, and digital currencies have also become a popular investment option.

If you’re seeking ways to make more money, trading is not the only way. Investing in “Siolla” helps you save your money, and invest it for you to make more money over time. And you can start with a small budget.

Invest now! To secure your and your family’s future. 

What is an investment portfolio and how to create one?

Posted on by siolla. Team

Have you ever read about investing and come across the term “portfolio”? This concept can be difficult to understand in the financial world. What is an investment portfolio? And is it possible to learn how to make the right investment portfolio for you? In this article, we will answer all of your questions.

What is an investment portfolio?

All of your investments, including stocks, bonds, cash, exchange-traded funds (ETFs), mutual funds, real estate, and anything else you decided to buy are together referred to as your portfolio.

Learning how to build an investment portfolio can help you reach your personal goals by assessing your risk tolerance and setting your financial goals. Your “portfolio” is a unique expression of who you are and where you want to put your money, so the investments you choose should reflect that. Plus, your portfolio is supposed to be dynamic and certainly will change throughout your investing life as your circumstances and priorities change.

In addition to your goals and level of risk tolerance, there are factors that will assist you in choosing what to put in your investment portfolio. Such as diversification when creating an investment portfolio. By diversifying your portfolio, we mean buying multiple types of investments so that your portfolio’s performance is not tied to one specific category, industry, or company.

What is useful in diversifying your investment portfolio?

Diversification can help minimize market losses and increase your portfolio’s profits. Yet diversifying your investment portfolio does not guarantee that you will see a positive return, but it can reduce your risks by investing in several areas.

For example, you have $7000 invested in stocks and $3000 in bonds. In this case, your total portfolio of $10,000 has a 70/30 savings allocation, because you have 70% in stocks and 30% in bonds.

This is more versatile than investing your entire $10,000 in stocks. You can diversify even more by distributing your money to different investments. For example, you can put 50% in stocks, 30% in bonds, and 20% in ETFs.

A more diversified portfolio is less vulnerable to risks and fluctuations, because drops in one type of investment can be offset by more stable performance in other types. Taking risks is inevitable when investing, and portfolio diversification is one way to help you mitigate it.

How to build an investment portfolio?

Investment portfolios are dynamic not static. For example, a young investor who is starting to save for retirement might invest their portfolio in stocks. Although stocks have more volatile returns than bonds, younger investors have enough time to withstand market fluctuations and make a great profit. In contrast, someone closer to retirement age may want to distribute their savings more toward less volatile bonds.

There is no specific approach to build your portfolio, as your plan of diversifying your investment portfolio will change over time based on your needs. Here are several tips to get you started:

  • Consider and be aware of the risks you are taking.
  • Set your short and long-term goals.
  • How long do you plan to keep your money invested?

Finally, you can count on Siolla to create an investment portfolio that suits your financial goals in the future.

Why should you teach your child to invest?

Posted on by siolla. Team

Everyone agrees on one thing when it comes to investing: they wish they had begun earlier. Starting to save and investing at a young age is better to comprehend fairly complex concepts like market fluctuations and profit reports, which are concepts that many adults also find difficult to grasp.

Making a custodial account for teenagers is one of the options to teach them how to start investing while they are young.

Custodial accounts for teens

Kids and teenagers under the age of 18 can get a custodial account, a sort of investment account. the parent or other relative handles this account, which enables them to trade a variety of investments that are advantageous to the child, such as stocks and ETFs. The ownership of the account is then transferred to the young when they reach legal adulthood.

For parents looking to save for college or other expenses that can benefit their kids, several investment banks and conventional banks offer custodial accounts. Institutions that offer these accounts often create educational content as well, which can help investors learn more about the world of finance.

Involving teens in their investments

Teens can learn how to manage a portfolio at a young age by being involved in the administration of their custodial accounts. Although this account is officially run by parents or guardians, giving young investors some control over their investment portfolio can spark an interest in finance and provide them with priceless experience in handling their funds.

Young investors can also benefit from custodial accounts by learning the fundamentals of economics and finance. For example, discussing investment techniques and the S&P 500 with your kids might boost their self-esteem and sense of responsibility.

One of the positive aspects of starting early is the money growth that the portfolio might experience over time, due to compound interest.

Rules for custodial accounts (UGMA/UTMA)

These accounts has restrictions set by the bank, but there are some general rules that you must take into account:

Custody accounts for kids only

All funds in the account belong to the children from the moment the account is created, until they reach the age of majority, which ranges between 18 and 21 years, and take control.

The funds must benefit the kid

The money in the custodian account is for the children’s needs only, and the guardians cannot use it for their personal needs.

Beneficiaries can use the money as they see

After teaching your children the basic concepts about saving and investing, they will be able to use the money as they wish once they take over.

Learning about investing can teach your kid important lessons about money and personal finance while helping him avoid some mistakes. Financial education allows your child to become familiar with his money and know when and how to successfully approach long-term financial goals.

Invest for your kid’s future and let them begin their success journey with the custody account!.

What Are Fractional Shares? Here is the most important information about it

Posted on by siolla. Team

A Fractional share is a portion of a security such as a stock, mutual fund, or exchange traded fund (ETF). They can make investing easier by allowing you to buy a portion of a stock that might be out of your budget range.

If the share cost $400, the brokerage firm might sell one-tenth of the partial shares for $40 each. Sometimes partial shares are created in dividend reinvestment plans (DRIP).

What is the difference between fractional and whole shares?

A whole share is a unit of a company’s stock, a mutual fund, or some other investment. Shareholders may sell them for profit. But they can be very expensive, which puts them out of reach for many investors.

Fractional shares are slices of a complete share, which you might think of as a pie. You can cut the pie into several slices. Many advantages of full shares are also available with fractional shares, but at a lower cost.

How do fractional shares work?

Here’s an example: Ahmed wants to invest $100 in Company M, but one share costs $500.

The brokers offer Ahmed fractional shares in the stock of Company M. Ahmed invests $100 and receives 0.2 shares of Company M, where $100/500$=0.2$.

When the share price of Company M goes up or down, the value of Ahmed’s investment goes up or down in proportion to the fractional share. When compared to whole shares, fractional shares allow you to invest with less money, however they are not available at every brokerage firm and may come with certain fees and restrictions.

If you invest with a brokerage that offers fractional shares, you can buy them as you would any other security, such as whole shares, mutual funds, or ETFs.

To create fractional shares, brokerage firms buy whole shares and subdivide them into fractions, allocating lots to several investors. 

This is why fractional shares cannot usually be transferred to a different broker if you switch investment companies. Instead, your broker will buy back your fractional shares. In this case, any profit you make from selling your shares back to the broker will be taxed.

Create fractional stocks through DRIPs

Dividend reinvestment plans (DRIPs), stock splits and mergers can all result in the creation of fractional shares. Even your whole shares might become fractional shares.

Whenever share prices exceed dividends, DRIPs redistribute dividend payments, to buy additional shares of the same investment and convert them into fractional shares.

There are two types of stock splits: a forward stock split, in which more shares are created, and a reverse stock split, in which shares are consolidated to create fewer whole shares. The difference is in the number of shares you ownو the value of your entire investment remains the same.

Benefits of buying fractional shares

The availability of fractional shares has opened new doors for many investors. Because it has a lower cost, it gives you access to a wider range of investments, especially high-priced stocks. So you may be able to start investing sooner and find it easier to diversify your portfolio.

The benefits of investing in fractional shares include:

  • Start your investment with a sum that is within your budget.
  • Invest in stocks that are compatible with your goals and strategy.
  • Obtain access to stocks with higher prices for investing
  • Consider making investments in more securities.(Explore investments in more stocks)
  • Lots of options available to diversify your portfolio.

Fractional shares allow you to start even if you are money tight, but still earn a return on your money. This is important if you are considering a long-term investment. Even small beginnings can earn you money, and with the power of compounding, they can grow exponentially over time.

Disadvantages of fractional shares

Fractional shares vary between brokerages, and you may find differences in trading policies, costs, and fees. It is important to do extensive research before investing.

Potential drawbacks to take into account are:

  • Trading commissions for fractional shares.
  • Lower profits and dividends.
  • Not having stock’s voting rights.
  • Risk of difficult-to-sell, illiquid shares.
  • Tax repercussions of switching brokerages.
  • Restrictions on what, when, and how you can sell.

Important information to know about fractional shares

  1. Do fractional shares pay off?

If the security pays a dividend, the fractional shareholders receive a proportionate share. For example, if Company A pays a dividend of $10 per share and you own 0.5 share, you will receive $5.

  1. Is it better to buy fractional or full shares?

Fractional stocks may be suitable for your portfolio if you are new to investing, or you want to diversify your portfolio without investing a lot of money. It is important to understand the policies and expenses of your brokerage. You may face restrictions or fees that make investing in fractional stocks less tempting (appealing/ not interesting).

  1. Is it useful to buy fractional shares?

The answer will depend on your financial situation, your investment strategy, and the brokerage you chose. For instance, you might find that the fractional shares are not worth the expanses (effort/fees). Or you might prefer more flexibility to transfer your portfolio; Typically, fractional shares cannot be transferred between brokerage firms, and liquidating them may result in tax liabilities.

However, fractional shares provide a lot of freedom.If you want to know if fractional shares are the best option for you, think about your long-term aims, brokerage fees, and how well their rules match your financial strategy. Keep in mind that all investments involve risks, including the possibility of losing money.

  1. Are ETFs available as fractional shares?

Each brokerage firm chooses which stock to sell as fractional shares, and some offer fractional shares in ETFs.

  1. Can you sell fractional shares?

Brokerages allow you to trade fractional shares, however, each has its restrictions and fees. But your brokerage might not guarantee liquidity. 

Liquidity is how quickly and easily you can sell your investment without suffering a loss, illiquid shares might be more difficult to sell and result in a loss of capital.

  1. Are fractional shares included in DRIPs?

A DRIP reinvest your dividends in additional shares of the same security. Because each dividend payment may not be enough to buy a full share of stock, DRIPs usually result in fractional share ownership.

Last but not least, if you really want to buy a stock but the price is too high for you, you may consider fractional shares. When you approach investing piece by piece, you can achieve success.