How To Buy Google (Or Any Pricey Stock) For $50 A Month

posted on 06-07-2019

To the dismay of average investors, great companies such as Google Inc. (Nasdaq: GOOG), Inc. (Nasdaq: PCLN) and MasterCard (NYSE: MA) come with a steep price tag.

Each has a stock price above $500, making it nearly impossible for small-time investors to buy their shares. And 29 other companies in the United States are similarly out of reach, with the "A" class shares of Berkshire Hathaway (NYSE: BRK) taking the prize with a $155,000 asking price.

But we'll tell you how to get around that. You can own these pricey stocks for as little as $50 a month.

The truth is, a lofty share price isn't a barrier to entry -- if you're willing to own a partial share of these companies.

Until my editor enlightened me to this investment angle, I had no idea it even existed. After a little digging, I think more investors should take heed of this barrier-breaking investment method.

In 1999, started offering investors the chance to buy a fraction of one share of a company. That year, hordes of new investors were buying into the surging market, even if they had only $50 or $100 a month to invest. Fast-forward to 2013, and Sharebuilder is among the top 10 online brokerage sites and oversees 1.3 million accounts.

It was a bumpy road at the beginning, as investors shunned stocks after the painful dot-com meltdown. Though Sharebuilder managed to slowly build a customer base, the business really took off when Netherlands-based bank ING bought the company in 2007. (ING sold to Capital One Financial Corp. in 2012, which has helped boost the company's visibility further.)

Although Sharebuilder also offers traditional stock brokerage services, it's best known for its automatic investment plan. Investors can arrange to send a fixed amount of money every week, two weeks or month directly to through various methods, including direct deposit.

Other discount brokers such as TD Ameritrade and Charles Schwab will re-invest your dividend payments into new shares, even on a partial share basis, though they don't have a formal partial share program as Sharebuilder does.

Let me explain how to buy partial shares.

First, decide how much you want to invest each period. Then select the stocks, mutual funds and ETFs that you would like to buy. Sharebuilder, for example, will divvy your money into the various choices, buying a fraction of a share at a time. Companies like Apple (Nasdaq: AAPL) and GE (NYSE: GE), along with ETFs such as SPDR S&P 500 (NYSE: SPY), are among the most popular.

The charm of this approach lies in what is known as dollar-cost averaging, which is the process of investing a fixed amount on a regular basis and can minimize your risk.

Rather than commit a large sum of money into the stock market at one time (as many investors unwisely did in 1999 and 2000), you can slowly build up your market exposure over time.

Who is the target audience for this automatic investment plan?

"It's great for investors that are just getting started," said Brandon Potter, head of Sharebuilder's product development team. He added that "our core demographic is investors in their late 30s and early 40s, which is a bit younger than our rivals."

That's the age when investors typically begin to build up portfolios, whether it is for retirement planning or to fund a child's education.

Indeed, Sharebuilder's easy-to-use website guides investors into seven different types of accounts, including:

  • Individual accounts
  • Joint accounts
  • Traditional IRAs
  • Roth IRAs
  • Rollover IRAs
  • Custodial accounts
  • Education Savings Accounts (ESAs)

Looking to the day when these portfolios need to be cashed in? Sharebuilder reverts to the traditional brokerage model. Considering the average age of the typical client (about 40), investments likely won't be sold off for several decades because retirement is far off. 

And dividend re-investment plans, known as DRIPs, are offered by many companies. For example, if you register your shares of Coca-Cola (NYSE: KO) with the company, new dividends will not be paid out in cash but instead in the form of new (or partial) share purchases. This is a savvy move for investors who prefer to see their investments grow in value, rather than produce regular income.

The Investing Answer: Investors naturally gravitate toward lower-priced stocks, believing them to hold greater value than high-priced stocks. Of course, the price of a stock has no actual bearing on value, which means that investors are unfortunately missing out on great companies such as Google, Priceline, MasterCard and others.

Although the ability to buy fractional shares is a plus, it's the dollar-cost averaging approach employed by Sharebuilder's automatic investment plan that is the real charm. Investors can simply decide in advance which great companies they want to own, and then let the program shift into auto pilot. Many years down the road, tiny acorns might grow into large trees.