Buying whole shares vs fractional

olb81

Hi
I have a freetrade account and want to start purchasing shares in a s and s isa or gia.
Ill probably buy about 100 worth a month and also see it as an emergency fund , i also have pensions for long term. This is more for fun instead of sports betting.
Any recommendations on buying a share at a time in whole shares or putting a fixed amount in each month and buying fractions?

p00hsticks

Shares aren't really the best option for an emergency fund as if that emergency occurs during a market downturn you'll end up crystallizing losses. You are better off having your emergency fund in an easy access cash savings account. Shares are for the long term - a minimum of 5 - 10 years is often quoted. 

Exodi

Shares for an emergency fund? Madness. Last month my diversified portfolio dropped 11% in less than a week - if I was doing what you suggest and had an emergency at that moment I would have had to crystallise the loss (whereas instead the market has recovered). Put it in a decent easy access savings account, plenty around 5%.

Re: fractional vs whole

If you want to save £100, it makes much more sense to buy fractional shares if you're able to since you're investing all the money right away.

E.g. VUSA is trading at £83.30 at the moment.

On the first month if you paid in £100 in fractional shares you'd purchase 1.2 shares. If you paid in £100 in wholes shares, you'd purchase 1 share, with £16.70 left un-invested in Cash.

On the second month (assuming share price doesn't change for this example), for fractional you'd own 2.4 shares, whole you'd own 2 shares with £33.40 left un-invested.

Eventually the uninvested cash would be enough to buy another share, but you can see you're always left with uninvested cash doing nothing.

(not recommending you invest in VUSA, was just an example).

wmb194

olb81 said:

Hi
I have a freetrade account and want to start purchasing shares in a s and s isa or gia.
Ill probably buy about 100 worth a month and also see it as an emergency fund , i also have pensions for long term. This is more for fun instead of sports betting.
Any recommendations on buying a share at a time in whole shares or putting a fixed amount in each month and buying fractions?

Freetrade only offers fractional shares for US listed shares. Trading212 offers fractional shares for most (all?) markets. I'd use T212 and make sure every penny is invested but it's up to you.

Voyager2002

Divide your money into an emergency fund and a budget for fun, an alternative to sports betting.

Put the emergency fund somewhere safe and boring: for example, Virgin Money offer a regular savings account that pays around 10 per cent AER.

For your 'fun' money: it might be exciting to put the lot on one highly volatile share and maybe see it double or maybe see it crash. Or you might prefer to spread it around a bit, in which case fractional shares would be the way to go: lower risk of near-total loss, but probably no chance of hitting the jackpot.

Section62

Voyager2002 said:

Divide your money into an emergency fund and a budget for fun, an alternative to sports betting.

Put the emergency fund somewhere safe and boring: for example, Virgin Money offer a regular savings account that pays around 10 per cent AER.

For your 'fun' money: it might be exciting to put the lot on one highly volatile share and maybe see it double or maybe see it crash. Or you might prefer to spread it around a bit, in which case fractional shares would be the way to go: lower risk of near-total loss, but probably no chance of hitting the jackpot.

6.5% AER currently.

olb81

Thanks i know its forbidden here but can anyone suggest any books or forums which talk about buying stocks/picking 

wmb194

olb81 said:

Thanks i know its forbidden here but can anyone suggest any books or forums which talk about buying stocks/picking 

A mainstream option for mostly London listed shares and funds is Investors' Chronicle, a weekly FT publication, that you can find online and at the newsagent.

Hoenir

olb81 said:

Thanks i know its forbidden here but can anyone suggest any books or forums which talk about buying stocks/picking 

If there's just room for one book on the shelf. I'd recommend. 

Harriman's NEW Book of Investing Rules

The do’s and don’ts of the world’s best investors

By Christopher Parker

Chapters are concise and to the point. With 50+ leading investors providing their own insight into the world of investment. 

olb81

Thanks for the recomendations