Key Benefits of Auto-investing and Fractional Shares

Summary

• Differences between a one-time purchase investment and auto-invest
• 3 benefits of auto-invest
• 3 directions suitable for auto-invest
• 3 strategies to assist in improving your auto-invest return
• 4 reminders to auto-invest

Source from Visual China

Hi Tigers,

If you're following the stock market, you will know that the most expensive stock in the US is $Berkshire Hathaway(BRK.A)$ (quoted at $468232.75 By Nov 15th, 2022). As this is phenomenally expensive, many investors choose the more affordable $Berkshire Hathaway(BRK.B)$ as a smart and easy alternative option.

The great news for investors is that both stocks exhibit almost the same trend as shown in the chart below.

Data from TradingView as of 15 November, 2022

Not every company has both A and B shares with different prices and not every investor is willing to purchase high price stocks.

The most US expensive stocks

These 12 stocks that are priced at over $1,000: $Berkshire Hathaway(BRK.A)$ , $NVR Inc(NVR)$ , $Seaboard(SEB)$ , $Texas Pacific Land(TPL)$ , $AutoZone(AZO)$ , $Booking Holdings(BKNG)$ , $BROADCOM INC PFD SER A 22(AVGOP)$ , $Chipotle Mexican Grill(CMG)$ , $White Mountains Insurance(WTM)$ , $Mettler-Toledo(MTD)$ , $Markel(MKL)$ ,$MercadoLibre(MELI)$

Such thresholds keep many investors trading away. 

On the one hand: When the investment amount is limited, the higher the share price of a single stock, the fewer shares investors can buy, and the requirements for investors to choose better-quality stocks are higher.

On the other hand: If you are a novice investor, you are always warned not to put all your eggs in one basket. Higher share prices prevented you from buying other stocks at the same time. Also, by not participating in venture capital you may also miss out on opportunities to maximize capitalutilization.

Recognizing the need for a way to allow investors of all levels to buy into the US stock market that's affordable, convenient, and easy, Tiger Trade now provides fractional shares trading and auto-invest functionsfor stocks on the S&P 500.

You can start with a minimum investment amount of USD 1 and buy the stocks you want (even if it is less than one share). At the same time, you can set up an auto-invest plan allowing you to continuously invest by selecting recurring payments either daily, weekly, fortnightly or monthly.

What shares can be purchased through fractional shares?

Fractional shares allow investors to purchase shares listed on the $S&P 500(.SPX)$ . That's just over 500 companies including $Tesla Motors(TSLA)$ , $Netflix(NFLX)$ , $Amazon.com(AMZN)$ and more. With fractional shares, you can invest how much you want and can afford irrespective of the stock price, whether it's $1,000 or $500 per share. You'll be able to invest in your favourite companies without breaking the bank.

For example, the following table shows that you can buy 4 stocks with just USD 200: $Tesla Motors(TSLA)$ invests $50, $Apple(AAPL)$ invests $50, $Alphabet(GOOG)$ invests $50, $Amazon.com(AMZN)$ invests $50, and so on.

Prices in USD and based on close of November 15, 2022

Now you can buy as many stocks as you want in the companies you love. Through auto-invest you can trade on the S&P 500 and put your fractional shares on repeat, so you'll have a steady build-up of shares in your portfolio.

The following content will focus on explaining the best use of the auto-invest strategy.

What is auto-invest?

Auto-invest is a very common trading tool in the US stock market. It is a process of repeated investment on a regular basis, which can accumulate wealth in any market fluctuation environment. 

The 'Auto-Invest " function on the Tiger Trade app allows you to maximize your capital returns with your spare change. With Tiger Trade you can auto-invest in stocks on the $S&P 500(.SPX)$ .

Functions may vary to jurisdictions

The following content will introduce the difference between a one-time purchase investment and auto-invest, the benefits of auto-invest, which stocks are suitable for auto-invest, and how to improve the return by using auto-invest.

5 Points You Must Know Before You Implement an Auto-invest Plan

1.The Differences Between One-time Purchase Investing and Auto-invest

By Tiger_Academy

2. The Benefits of Auto-invest

2.1 Automatic investments: Time-saving and labor-saving

The one-click setting of stocks recurring investment allows the system to automatically deduct money to buy the chosen investments, and the user just needs to ensure that there are enough funds in their account.

2.2 Invest regularly to earn compound profits

Tiger Trade's stock trading account supports daily, weekly, bi-weekly and monthly scheduled auto-investments. According to calculation statistics, assuming you started to auto-invest in 1992 with a monthly fixed USD 50 on the $SPX, by 2022, the total investment over 30 years is USD 36,000, and the total return on investment reaches USD 81,192, an annualized return of about 7.52%.

Note: Past performance is no guarantee of future results. Graphics and charts are for illustrative purposes only.

2.3 Average the cost, spread the risk

Cash can be invested in installments. When when the market falls, you can buy a stock at a lower price; when the market is good, you may get a return if the market is in an uptrend.

3. What Stocks are Suitable for Auto-invest?

Tiger Trade's auto-invest feature currently supports US stocks listed on the $S&P 500(.SPX)$. You can see the auto-invest in the stock order function area and you can add stocks tickers to the plan and set the investment amount and frequency easily.

By Tiger_Academy

What stocks are suitable for auto-invest？

Here are 3 basic ideas on how auto-invest may be able to help you reach your investing goals. However, it is recommended that you to always consider your financial situation before making an auto-invest choice:

3.1 Auto-investin low-valued targets. High-valued targets may have larger price bubbles, and low-valued targets have a higher probability of subsequent rise, which is more suitable for fixed investment.

3.2 Auto-invest targets with stable earnings performances. Companies with stable financial performance and higher profitability are more likely to obtain positive feedback from the market.

3.3 Auto-invest targets at the bottom area. When the stock is already at the bottom area of a descending channel, when the market rebounds, the probability of obtaining a positive return is high.

4. How to Improve the Return of Auto-invest？

4.1 Insist on recurring investment

Auto-invest by daily or weekly ( from Monday to Friday), fortnightly (from Monday to Friday) or monthly (1st to the 28th of each month)Even when the auto-invest may face float and loss, investors may gain profit in the long term.

4.2 Adding positions at lower prices

The more experienced investors of auto-invest love the decline of the stock market, they believe it is a good time to accumulate cheap chips at a low position.When the market pulls back, you can modify the auto-invest plan to increase the invested money each time.

4.3 Make a profit at higher prices

In a volatile market, whenever there is a certain profit from auto-investing, you can consider selling and making some profit.If it is an obvious upward trend or even a bull market, you may consider selling until the trend tends to reverse.

5. Four Reminders about Auto-invest

5.1 Determine the amount: Determine the amount and period you want to auto-invest in, so that you have no financial burden.

5.2 Choose a target stock: Choose a target that is oversold, but the fundamentals are good, or a promising industry target for the future.

5.3 Keep long-term investment: Long-term investment is an important principle for the accumulation of wealth in auto-invest. With persistence, the effect of compound benefits can be better.

5.4 Pause and switch at the right time: If the market has risen to a very high point, or ushered in a turnaround, you can take profits first, wait for the opportunity or switch to another target before auto-investing.

Overview:

In addition to the deposit, stock, and fund investment, auto-invest is a good choice for sustainable investment using scattered money. By investing on a regular basis, you will have the opportunity to share in the growth and dividends of the market.

For investors with long-term financial planning and those who need help sticking to their investment goals, Tiger's auto-invest feature is available on US stocks listed on the $S&P 500(.SPX)$ with a minimum USD 1 investment.

So, go on start auto-invest now, if you have any more questions, please leave a comment under the post, and we will reply to them.

Disclaimer

Capital at risk. See FSG, risk disclosures and fractional shares disclosure, PDS, TMD and T&Cs via our website before trading.Information provided may contain general advice without taking into account your objectives, financial situations or needs. Past performance is no guarantee of future results. Graphics and charts are for illustrative purposes only.