After introducing commission-free investing, Amsterdam-based BUX is now looking to normalise fractional investing in Europe. The neobroker announced on Monday that it has now become the first broker in the Netherlands to launch fractional investing to help invest in companies that otherwise often remain unreachable.
BUX believes that introducing fractional investing in the Netherlands is the second step in building an investment culture alongside the savings culture.
What is fractional investing?
Currently, many investors with smaller wallets are unable to invest in a company, for example, Amazon with a share price above $3,000, while building a diversified portfolio. Fractional investing will allow such investors to buy a piece of stock with a small amount of money.
Fractional shares are partial shares of a company’s stock. Instead of owning one or more full shares of the stock, the investor owns a portion, or fraction, of one. In the past, investors generally would end up with fractional shares only after a stock split, since brokers allowed the purchase of full shares only.
According to a report from Gallup, 2021, 56 per cent of the American population invests in the stock markets. The number is much lower in the Netherlands where only 1.6 million (AFM, 2021) people invest out of a population of more than 17 million, which is about 9 per cent of the total population.
What does this mean for investors?
According to research by the AFM, more than 50 per cent of investors – who invest in the stock market themselves – have invested less than €25,000. For example, an investor with a budget of $10,000 would also like to invest in Amazon, with a price above $3000, and buy one Amazon share. Then 30 per cent of the investment portfolio consists of Amazon.
For all such investors, fractional investing will help them include fractional shares with high share prices in a diversified portfolio. This prevents investors who do not have large amounts of money to invest with from relying too much of their investment portfolio on one stock with a high price.
CEO of BUX, Yorick Naeff, explains, “With the launch of fractional investing, we are introducing a form of investing that is already being used by many people in the US, as the first broker in the Netherlands. As of today, even budget investors can build a diversified investment portfolio with fractional shares of companies such as Tesla, Alphabet, and Amazon. This can help more than half of Dutch investors who invest in the stock market themselves with a more thoroughly diversified portfolio and a better financial future in the long term.”
BUX’s clients can now fractionally invest in the 100 most popular US stocks through its investing app BUX Zero, starting as low as €10. Other US stocks will soon become available. In the near future, fractional investing in ETFs and European stocks will also be possible in the BUX Zero app.
“Do more with your money”
Founded by Egbert Pronk, Joost van de Wijgerd, Nick Bortot, and Robbert Bos, BUX is a neobroker and has been making it easy and affordable for Europeans to do more with their money since 2014. The company claims to help new generations of investors and traders discover the world of the financial markets. The company has over 600,000 clients.
Currently, it offers three apps to explore the financial markets, including BUX Zero, its flagship platform that is making commission-free trading possible, allowing users to invest in the brands and companies they care about.
The full range of BUX products, including BUX Crypto, which allows users to invest in real cryptocurrencies, and BUX X, where users can trade in contracts for difference (CFDs), are available across Europe.
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