Suze Orman says a diversified portfolio is important. Here’s an easy way to achieve one


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Many investors these days are reeling from losses (or at least screen losses) in their brokerage accounts. The stock market just had a miserable first quarter of 2022, and we don’t know how long it will take for portfolios to recover.

Financial guru Suze Orman is sympathetic to those shaken by recent stock market events. But she also says it’s important to maintain a diversified portfolio because having one could make situations like the current market downturn more bearable.

Not only can a diverse mix of investments help limit your losses during downturns, but it can also be your ticket to growing wealth over time. And if you want to build as diverse a portfolio as possible, there is one key brokerage account feature that is worth researching.

The option to buy the shares you want

Some stocks can be purchased for as little as $10 per share, while others cost $1,000 per share or more. This can be difficult if you want to invest but don’t have a lot of money to work with. But if you choose a brokerage account that offers split investing, money (or lack thereof) shouldn’t be a barrier to owning the stocks you want.

Split investing lets you buy part of a stock if you can’t afford a full stock. So, let’s say there’s a company you want to invest in that’s trading for $1,000 per share, but you only have $250 available to you. With split investing, you can buy a quarter of that stock and as it goes up in value, you benefit proportionally.

So, let’s say the stock price of this company increases to $1,200 over time. You won’t earn $200 in your brokerage account because you don’t own a full share. Instead, you’ll earn 25% of that, or $50.

Similarly, let’s say the stock makes a quarterly dividend payment of $40. You will receive a payout of $10 since you own a quarter share.

Fractional investing can bring more diversity to your portfolio because you will have the option of buying partial shares of many companies instead of being limited to whole shares of just a few companies. And businesses that would otherwise have been financially out of reach could become viable investments for you.

Today, most major brokerages offer the ability to invest in stocks on a fractional basis. But if you already have a brokerage account and it doesn’t give you that option, it might be time to switch.

Take Orman’s advice to heart

Diversifying your portfolio and loading a wide range of stocks is an important step towards growing wealth and minimizing losses during a downturn. Split investing makes diversification easier, so be sure to take advantage of this option if it’s available to you. And if you haven’t started investing yet but are looking to get started, try to find a brokerage account that offers the option to buy fractional shares.

Check out The Ascent’s Best Stock Brokers for 2022

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