Hello everyone, this is Koro.
In this article, I will explain fractional shares. Many people who started investing through NISA likely began with mutual fund accumulation. I have written 50 free articles so far. This time, I have compiled this paid article specifically about fractional shares, which I want beginners to know about.
First, representative options for mutual funds include index funds like ‘eMAXIS Slim Worldwide Equity (All Country)’ or ‘eMAXIS Slim US Equity (S&P500)’, which aim to track indices over the long term at a low cost.
This is easy for beginners to get started with, as it involves investing in a wide range of stocks.
On the other hand, active investing involves selecting specific companies or sectors to aim for returns that outperform an index. Generally, these tend to have higher management costs compared to index investing.
In fact, there are studies showing that many active management funds underperform their benchmarks over the long term.
I have also made many mistakes.
I once bought 100 shares of a Japanese company I didn’t know and lost money, and I also ended up with a portfolio where I kept buying mutual funds for India, Europe, bonds, high dividends, and then Indonesia, only to realize it was all just ‘All Country’ in the end. If you over-diversify by adding too many mutual funds that are already diversified, your performance will become extremely poor.
Otherwise, my basic plan is to keep my core investments accumulating without selling, and only withdraw when absolutely necessary.
Even I have regretted selling my core holdings once. I was watching a famous person on an investment-related YouTube channel, and every time I watched, they would say that the US economy would face stagnation, unemployment and prices would keep rising, leading to stagflation, and that stock prices might crash…
I thought, ‘I see, I can’t say there’s zero possibility of that,’ and I let it sink in. But I was afraid to sell everything, so I decided to sell just one-third.
In the end, I ended up having to buy it back again.
Furthermore, it continued to rise steadily even after I sold. Of course, investment is a personal responsibility, so I don’t think that person was wrong. It was my own fault.
It’s fine to study by looking at various opinions, but I should have been more cautious about negative ones. Since then, I have stayed the course, and I no longer watch that person’s videos. If things are going to go wrong anyway, it’s more fun to invest with a positive mindset, and since NISA is for the long term, it’s better to just leave it alone without selling.
The introduction has become long, but with that mindset, I have been diversifying my core investments over time and investing in mutual funds little by little. And since the amount has built up to a certain extent, I have started to think about trying my hand at individual stocks.