Cash App for buying fractional shares of ETFs

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tc101
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Cash App for buying fractional shares of ETFs

Post by tc101 »

A young friend who is just starting to invest called and asked me for advice. He has a Cash App account. They say they allow buying fractional shares of stock with no fees. Is Cash App as good a place as any other for my friend to start buying fractional shares of ETFs?
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anon_investor
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Re: Cash App for buying fractional shares of ETFs

Post by anon_investor »

tc101 wrote: Sun Dec 20, 2020 11:29 am A young friend who is just starting to invest called and asked me for advice. He has a Cash App account. They say they allow buying fractional shares of stock with no fees. Is Cash App as good a place as any other for my friend to start buying fractional shares of ETFs?
Fidelity lets you buy fractional ETF shares. Why not go with an established brokerage company?
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Ice-9
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Re: Cash App for buying fractional shares of ETFs

Post by Ice-9 »

At present time you can only have a taxable account at CashApp. This may change.

The advantage with CashApp is that users already have it for P2P payments and thus less friction on the way to get started with investing.

If it were my young friend, I'd tell them it couldn't hurt, but I'd make them aware of the benefits of say a Roth IRA which isn't too difficult to set up on the platform of one of the more traditional companies.

https://www.fool.com/the-ascent/buying- ... ng-review/
Last edited by Ice-9 on Sun Dec 20, 2020 11:40 am, edited 1 time in total.
stan1
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Re: Cash App for buying fractional shares of ETFs

Post by stan1 »

Is the young friend investing or speculating?

Social media and "gamification" features of platforms like CashApp and Robinhood may promote speculation not investing.

Behavior is more important than the platform. Personally I'd recommend a Roth IRA at M1 Finance for a young, serious INVESTOR who is not high income if the person did not want a simple target retirement account for some reason.
livesoft
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Re: Cash App for buying fractional shares of ETFs

Post by livesoft »

Someone just starting to invest should probably use an employer-sponsored 401(k) or 403(b). Maybe an IRA or Roth IRA.

Don't know about Cash App, but a google search discusses mostly how to avoid scams using Cash App.

My millennial children (i.e. young to me) use Fidelity.
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Re: Cash App for buying fractional shares of ETFs

Post by Jack FFR1846 »

My son uses Cash App for most of his purchases. He has bought and sold stock through it. I think he bought $8 worth of Apple and sold it at $10. I really don't know much about it myself.
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tc101
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Re: Cash App for buying fractional shares of ETFs

Post by tc101 »

Is money invested in an ETF with Cash App just as safe as money invested in the same ETF with Fidelity or Schwab?
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JoMoney
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Re: Cash App for buying fractional shares of ETFs

Post by JoMoney »

Buying ETFs instead of Traditional Index Funds is like having to pay a front-end and back-end load fee on purchases/sales.
But rather than being an explicit fee, like active mutual fund companies would do, with ETF's it's built in to the opaque frictions the market makers build in to spreads, getting front-run buy brokers selling order flow, and principal trading from the brokers. If you're not buying round lots (100 shares) you're not getting the best execution, and the smaller the size of your order the bigger the impact market spreads have as a percentage of your investment. Fractional share purchases aren't even going to the market at all. On top of that, younger small investors are getting sucked into the brokerage casino with all the buzz trying to induce trading activity.
Mr. Bogle was right with his condemnation of ETF's in favor of TIF's.

A young investor can open account with Fidelity, zero fees, and buy a Total Market or S&P 500 Traditional Index Fund with lower ER then any ETF out there, in any dollar amount, and know they're getting a precise transaction at closing NAV of the fund.
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