Thatās the thing. Specifying currency amount instead of share amount is already on non-beta accounts, without any explanation.
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Thatās always been the case though
Iāve illustrated the portfolio weigthing benefit thatās been mentioned as itās very big. Itās such a clean solution when you view from a portfolio perspective!
- It greatly reduces the risk from a single stock, (for instance in the below youāre forced to hold 5x the amount of Amazon shares than Blackrock)
- Amazon will be a problem for investors with less that Ā£20k assuming they a sensible 10+ holdings
| Stocks | Portfolio A | A % | Portfolio B | B % | Share Price |
|---|---|---|---|---|---|
| Amazon | 1,000 | 10% | 2,367.61 | 23.7% | $2,367.61 |
| Booking | 1,000 | 10% | 1,443.91 | 14.4% | $1,443.91 |
| Alphabet | 1,000 | 10% | 1,369.28 | 13.7% | $1,369.28 |
| Tesla | 1,000 | 10% | 780.04 | 7.8% | $780.04 |
| BlackRock | 1,000 | 10% | 497.39 | 5.0% | $497.39 |
| Netflix | 1,000 | 10% | 873.06 | 8.7% | $436.53 |
| Adobe | 1,000 | 10% | 733.56 | 7.3% | $366.78 |
| Apple | 1,000 | 10% | 607.48 | 6.1% | $303.74 |
| 1,000 | 10% | 633.78 | 6.3% | $211.26 | |
| Wells Fargo | 1,000 | 10% | 686.61 | 6.9% | $25.43 |
| Total | 10,000 | 100% | 9,992.72 | 99.9% | |
| *prices in USD as itās only US fractionals at the moment |
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Rob, how should the less mathematically gifted people like me read this table?
Itās fantastic that someone looks at actually modelling the impact of fractionals like this.
Great illustration.
However I think throughout this thread, the complaint is never on portfolio A, but lack of the option for portfolio B, isnāt it?
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Like others on this thread have said, I would like the choice of whether to buy whole shares or fractional shares.
There are reasons why investors prefer to buy whole shares (not just OCD) including portfolio management and the ease of checking dividends and corporate actions (brokers do get these wrong at times) as well as tax calculations. Whole shares also tend to be less intimidating for newer investors
I appreciate the feature is in beta testing and hope the decision is made to allow whole shares before it goes live - with confirmation ideally before the crowdfunding round as this decision it will impact on the amount I plan to invest.
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I think FTās idea is that, for new investors, itās easier to simply think about investing Ā£N into company ABC at Ā£X. If that Ā£X goes up 1%, they have Ā£N+1%. Ignoring fees, tax, etc.
Edit: that is, it might be helpful to new investors to not even think about which fraction (100% or less) of a fraction (share) of the company they own.
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I think fractions are more likely to put new investors off.
Regardless, offering to buy whole shares - not just by value - is standard functionality in every broker I have ever used.
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I have to admit I donāt understand why there is even a debate over this given that people are only asking for the option of ordering specific amounts of shares, not exclusivity.
Itās not even an issue of fractional vs whole shares. The issue is that there should be the option of ordering a specific amount of shares whether its 25 or 2.5.
Ordering a specific amount of whole shares is not a novel request, itās a basic feature. Iām guessing there must be a fixed reason why this canāt be achieved right now as Iām sure FT would if they could.
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Portfolio A spreads $10k over 10 shares evenly using fractional shares. Portfolio B is limited to buying whole shares and so has fewer options as to which stocks in the portfolio should be weighted more heavily.
Iāve used mostly US tech stocks, but if this were better diversied, then portfolio A would be very likely to beat portfolio B in terms of risk adjusted returns (e.g. higher return/same risk, or same return/lower risk, or even higher return / lower risk depending on the portfolio). This is because youāre being forced into having large holdings of companies with higher share prices, rather than being able to optimise your portfolio.
I understand the āinteger biasā and agree that an option to buy whole shares would be nice to have, but that this should be of secondary importance and if it were implemented, it should not be the default. A lot of Freetrade customers are starting to build their portfolioās and so Freetrade should encourage them to avoid cognitive biases where possible.
The integer bias actually works both ways, you either get a clean investment amount (e.g. exactly Ā£1000), or you get a clean number of shares, which is entirely random (e.g. 467). Hopefully this illustrates that the investment amount is much more important.
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Just a reminder to avoid all rule violations, including rule 6 - which covers distributing ads and engagement baits from other companies.
Other companies follow us and take action based on our product leadership and growth, spending extremely high amounts as they do. Please do your part to keep the forum as non-manipulated as possible.
Weāre seeing yet another wave of suspicious account activity since the announcement of the crowdfunding.
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Thank you! I understand it better now.
So, what I have to worry about is the amount I invest as opposed to how many shares I own.
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My mistake, wasnāt with any intention, just found it kind of annoying how they just lurk in this forum looking for whatever they can find. Itās not a viable long-term strategy from their side, but would rather not give them much chances to promote their product in such a crappy way. Still, Freetrade users are quite loyal to the cause and would hardly fall for this, but annoying nontheles.
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I have to say, the more I use the fractionalās purchase system, the more I like it. While I still feel a choice between purchasing Ā£12 of stock, or 12 shares would be nice, its nice to put Ā£12 into the purchase option and have it go through, instead of guessing what the stock price may be this second up or down a couple of pence and have the order rejected sometimes. (amounts for illustration only!)
I donāt have OCD so I hope this thought doesnāt offend those who do and have stated it here in the forum, but I wonder if it would help to think of the purchase price as the round number instead of the share? i.e. purchase Ā£10 or Ā£20 or Ā£100 at a time? Apologies if this is massively non-understanding.
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Iāve been making Ā£10 purchases but some of them come through as Ā£9.99 so that too could bother some people 
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hahaha, good point damnit 
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I bought 0.34191606 of a share in McDonalds today. Pretty cool. 
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Remember when Apple ditched the headphone jack and were ridiculed for it? Yeah, me too.
Now the majority of phones come without a headphone jack.
Technology disruptors / innovators are often applauded or ridiculed for their ideas, some stick, some donāt.
Freetrade is a challenger stockbroker, theyāre here to challenge the current ānormalā.
Who knows, in 5 years time you may look back and think, how stupid was it that we bought X number of shares rather than Ā£X of shares.
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Other brokers enable you to do this already but with the option to buy whole shares as well. From my interpretation of the comments the issue stems from both the way this change was communicated (i.e. it was not communicated clearly) and the fact that optionality has been removed.
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Bit of feedback for Freetrade @Viktor
At the moment the fractional numbers can easily be mistaken for 1000ās at a casual glance and could be confusing for those who have share holdings in the 1000ās plus fractionalās. Iād personally prefer if whole numbers were the current size and fractionals were ever so slightly smaller so they stand out as fractionals a little more.
i.e. smaller font for the fractional part of the holding:
instead of same size font for all numbers
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