As an investor, you may have heard of fractional shares and their growing popularity in recent years. Fidelity, one of the largest investment firms in the United States, has introduced its own version of fractional shares through its Fidelity Customer Agreement.
Fractional shares allow investors to buy portions of a single share, rather than purchasing a whole share. This means that investors can invest in high-priced stocks that they may not have been able to afford previously. For example, if a stock is trading at $1,000 per share, an investor can now buy a fraction of that share for a smaller amount.
Fidelity’s Fractional Shares Program aims to make investing accessible to a wider range of people. However, before jumping into fractional shares, it’s important to understand the Fidelity Customer Agreement and the terms and conditions that come with it.
The Fidelity Customer Agreement outlines the rules and regulations for investing in fractional shares through Fidelity. It explains how investors can buy and sell fractional shares, as well as how fractional shares are priced.
According to the Fidelity Customer Agreement, fractional shares are priced based on the current market price of the underlying security. This means that the price of a fractional share will fluctuate with the price of the stock it represents.
Another important aspect of the Fidelity Customer Agreement is its rules on the sale of fractional shares. Fidelity allows investors to sell their fractional shares at any time during market hours, just like they would with whole shares. However, Fidelity does not allow investors to transfer fractional shares to another brokerage firm.
In addition, the Fidelity Customer Agreement outlines the risks of investing in fractional shares. Like any investment, fractional shares come with risks, including stock market volatility and the potential for loss. It’s important for investors to understand these risks before investing in fractional shares.
Overall, investing in fractional shares through the Fidelity Customer Agreement is a way for investors to access high-priced stocks that may have been out of reach. However, it’s important to read and understand the terms and conditions of the agreement before investing. As with any investment, doing your due diligence and understanding the risks and potential rewards is key to making informed investment decisions.