Simply put, fractional investing — sometimes called fractional share investing — means that investors can buy pieces of an asset (this applies to cryptoassets as well as traditional assets such as stocks and ETFs) rather than having to buy the entire asset all at once.
Take bitcoin for example. Say the value of bitcoin is $10,000, but an investor only has $100 on hand to invest. By using fractionalized investing tactics, the investor doesn’t have to sit out and wait the months or years that it might take to save $10,000. Instead, they can start purchasing bitcoin with the $100.
Put another way, fractional share investing allows investors to start capturing upside (a fractional investor cares more about an asset’s value is increasing than they do about the actual price of the asset) with a minimal initial investment.
What this means is that retail investors don’t have to wait on the sidelines saving money for the day when they can finally buy into a market that they find interesting. Instead, fractionalized investing allows investors to break large investments into smaller parts and buy into a market over time.
Fractionalized investing makes getting started simpler because it doesn’t require a big initial investment (one share of Amazon costs $1840.12, while one share of Alphabet, Google’s parent company costs $1,120.14). For many retail investors, those kinds of share prices might be out of reach if purchased as full shares.
But fractional investing changes all of that, and allows everyone the ability to make investment decisions based on what they think might make the best return rather than what share prices they can afford.
Top three reasons why fractional investing is useful
Fractional investing makes investing easier and creates greater access. Here’s how:
- Opportunity: Fractional investing gives investors the opportunity to get access to valuable assets that might otherwise be out of reach. Investing with Abra only requires a $5 minimum to start buying exposure to fractions of valuable assets.
- Immediacy: The ability to mobilize small amounts of capital, instead of having to wait to save for the full value of the asset, means that investors can quickly react to changing market conditions.
- Customized portfolio: Fractional share investing also allows users to spread their portfolio across a number of assets in order to create a hedging or risk strategy.
Abra and fractional investing
Abra uses crypto-collateralized contracts in order to give investors exposure to traditional stocks and ETFs as well as synthetic cryptocurrencies outside of the US.
The crypto-collateralized contract model leverages the programmable aspects of the Bitcoin blockchain. Since investors are Abra users are holding synthetic expressions of the assets they are interested in holding (and in reality holding a position in a Bitcoin multi-signature contract), then fractional shares are possible, just like buying fractional amounts of bitcoin is possible.
The power of Bitcoin is truly multi-faceted, and the ability to create crypto-collateralized contracts to give investors all over the world the ability for simple and fractionalized access to some of the most exclusive and valuable markets is just one more reason why this technology is truly revolutionary.
Established in 2014, Abra is on a mission to create a simple and honest platform that enables millions of cryptocurrency holders to maximize the potential of their assets. Abra enables both individuals and businesses to safely and securely buy, trade, and borrow against cryptocurrencies – all in one place. Abra’s vision is an open, global financial system that is easily accessible to everyone.
Based in the United States, Abra is available in over 150 countries and makes it easy to convert between crypto and a wide variety of local fiat currencies. With over 2MM customers, $7B in transactions processed, and $1.5B in assets under management, Abra continues to grow rapidly. Abra is widely loved and trusted – in April 2022, pymnts.com reviewed and rated Abra amongst the top 5 most popular crypto wallets in the market. Abra is backed by top-tier investors such as American Express Ventures and First Round Capital.
How Abra Protects Your Funds
Abra places clients’ financial objectives and security first. Abra practices a culture of risk management across all levels and functions within the organization.
Abra employs a state-of-the-art enterprise risk management framework that comprises a comprehensive set of policies, procedures, and practices detailing all applicable risk-related objectives and constraints for the entirety of the business. Abra has instituted a complete set of requisite systems and controls that continuously enforce these policies, procedures, and practices to manage all operations, including credit and lending. Abra’s independent Risk Committee comprises experienced compliance, risk, securities, and fraud operations professionals with backgrounds in industries ranging from traditional and digital assets banking, payments, remittance, to fintech.
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Ismael tojin1450 days ago
Es muy genial
Evan1452 days ago
So are purchases in ABRA just shares or are they the real assets. As example when I purchase $100 in Bitcoin, is it Bitcoin or is it a share in Bitcoin. I understand your backend was in Bitcoin with new exceptions of native wallets lite LTC, DGB, etc. so let me extend the question to those as well, are they real LTC/DGB or are they shares and if so, in what?
Daniel McGlynn1450 days ago
It depends on the asset you are talking about. Native assets like bitcoin, litecoin, ether, and bitcoin cash are held as positions in those assets. Synthetic assets are bitcoin-based contracts that give you investment exposure to the underlying asset and adjust in value according to the movement of the asset you are investing in. This explanation goes into more details, and here is a talk at MIT on how it all works.
Isidro Porio1452 days ago
It is a great opportunty for us small investors to creat our wealth slowly with your innovations thank you so much