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Zachary Teo

Art Director at Ad Agency

04 Aug 2020

General Investing

Does buying fraction shares a form of DCA?

Having limited funds does not mean that we cannot get started perhaps buying fraction shares at 1 unit or 10 unit from time to time can get us a better hand into companies we love and believe in? Like ADBE, AMZN

Discussion (4)

What are your thoughts?

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I believe you are looking at the US market stocks.
Typical lot size in US markets is 1 share.
But the price of one stock share for some companies could be a high entry barrier to investors.

In that case, if you have access to platforms that allow fractional stock investing at reasonable cost, you could do regular investments into those stocks that you are interested in. And over time you build up your holdings in that company. So yes it allows you to start small and accumulate over time.

To me, it is the same as DCA just at a smaller level.

  1. No, buying fractional shares is not a form of DCA.

It just means that you are buying the same shares but at a lower price point while still being able to track the price of the stock and participate in it.

  1. For subscription services like Adobe and high volume relying business like Amazon, it would require massive scale in order for them to be profitable.

Pang Zhe Liang

01 May 2020

Lead of Research & Solutions at Havend Pte Ltd

There are three guiding principles for dollar cost averaging:

  1. There is a defined time period on ...

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