It’s been a tumultuous start to 2020. Our country (all countries) have been in the grip of a world-wide Pandemic, our cities filled with unrest and destruction over police conduct, and with millions of people out of work, not knowing how or when we might return to some sense of normal, I’ve been reluctant to write about financial matters.
One thing for sure, however, is the world keeps turning, the promise of tomorrow still exists. In the last 100 years of our history, we’ve endured the Spanish Flu Pandemic, The Depression, and World Wars 1 and 2, 911, The Great Recession….and still here we are. In that same time, businesses still made products, employed workers, people raised families and Seniors retired. The ups and downs in financial markets reflected the times, but still the Stock Market was resilient. And that is no different today. Although, this Spring, some of the wild swings in the Dow and NASDAQ have been “heart stopping), this too will pass….It may take longer than we wish, but better days lie ahead.
On that note, I’ve decided to share something new to investing, the “Slice”. You might call it a fraction or partial, and refers to investing in less than a full share of a Fund or Stock. Schwab has just introduced “Schwab Slices”; you may have seen this on T.V. FOR EXAMPLE ONLY, since I do NOT endorse any one firm over another, and others will surely follow with their own offerings, I’ve looked into this.
Here, an investor can buy a “slice” of any S&P listed stock for as little as $5, a maximum of 10 slices per transaction…For $50, for example, one could buy 1 slice each of Facebook, Amazon, Apple, Netflix, Google (FAANG) and 5 others like Disney, Intel, Microsoft etc. A single transaction cannot exceed $10,000,and multiple slices in any combination can be purchased. Example: 10 slices of each F-A-A-N-G, 50 slices x $5 =$250.
To be fair, most firms offer a Mutual Fund which tracks the S&P 500, but many come with a minimum investment and/or minimum re occurring investments at more than $5 per slice. With an account at Schwab (just an account to hold your money) you can buy/sell shares on-line at $0 commission. Fees levied by the Security and Exchange Commission, however, would apply as with sale of any stock. The account may require a minimum balance in order to trade, though it may sometimes be waived if monthly deposits are set up to fund the account.
So, you ask, is this a good idea? Until this new offering, I’ve been a cheerleader of no-load Mutual Funds and I could invest in a Fund that tracks the S&P 500 Index, but, for someone to buy “slices” of stock in any of these great companies, directly, is very cool. Further more, parents, grandparents can invest in this product for kids, grandkids, affordable like never before, in a custodial account.
Of course, it’s wise to learn more before you invest. However, on “first blush”, this could be a great way to diversify. Imagine telling friends/family that you’re a proud stockholder in some of Americas best known companies……………What will they think of next ???? Can’t wait!!!!
Regards: Cents maker