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A fund's units are sold for 150$. My platform allows me to start investing into that fund on a monthly basis for 100$, and I pay 25$/month in the next couple of years.

  1. Does that mean I buy a new unit in every 6th month (assuming the unit price remains the same)?

  2. What happens if I think I have saved enough and stop paying the monthly 25$ in the future? Do I have to sell my units if I'm inactive?

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    Those are questions that the trading platform is going to have to answer, we don't know what platform you are on and the rules can be different on different platforms. – zeta-band Mar 15 '18 at 17:10
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    Thanks, I find very little information about it on their website unfortunately. I'll try their support email. – Endre Börcsök Mar 15 '18 at 17:12
  • Sharing the platform/fund name might help/ Sounds phishy though. Almost like BitConnect that went down with fire recently. – Alexus May 16 '18 at 23:00
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Fractional units are the norm, and have no negative effect to you.

It is completely normal to buy, sell, and own fractional units of funds, and there are no limitations to it. Consider the fund value just an arbitrary 'Unit of Value', and your Dollars or Euros, etc. are worth different amounts of it on different days.

Some funds have a minimum investment, and some have a minimum monthly investment, but those are in $ (or Eur, etc.), and unrelated to fractional shares.

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For any mutual fund that I've bought, you buy fractional shares. If they are selling at $100 per share and you invest $25, you get 1/4 of a share. This may or may not be true of the fund that you're buying into.

I've never invested in a fund that has a rule that if you haven't bought more shares within the past month (or whatever time frame), that you must sell all the shares you have. I suppose a fund might have such a rule. I don't know of any law against it. But I don't see why they'd want to have such a rule. These people keep a percentage of whatever the fund earns, so the more money in the fund, the more they make. They have no incentive to kick you out. Well, some funds have a sales charge, i.e. when you sell, they take a percentage. But still, they don't make money by not having investors.

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    Some funds will lower or waive their minimum investment when combined with a systematic investment plan. If you are under than the standard minimum investment, you must continue to invest at a minimum rate, or they will liquidate your position. (This is because there's fixed costs per investor) This is of course completely dependent on the rules of the specific fund. – user71659 Mar 15 '18 at 21:40
  • @user71659 Okay. I've been in funds that waived or reduced the minimum if you made regular contributions. I've never been in one that required you to liquidate if you didn't make regular contributions. But the funds I've invested in are a minuscule percentage of all the funds in the world, so ... – Jay Mar 16 '18 at 4:42
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    It makes sense that they require regular contributions until you reach the normal minimum. Otherwise somebody could sign up via SIP, make one regular contribution, then stop, getting around the normal minimum limit. – user71659 Mar 16 '18 at 5:21
  • @user71659 I suppose if someone opened an account, deposited $10, and then stopped deposits, so now they have this account with $10, they may see that as undesirable. Like, just the cost of sending monthly statements and year-end tax statements is more than they're making from it. But if you were making contributions for a period of time and you have $100,000 in there, I'd be surprised if they would want to liquidate the account because you've stopped making contributions. ... – Jay Mar 16 '18 at 14:43
  • ... I have an IRA with $200,000-some-odd that I'm not making contributions to, because my new money is going into a 401k with a different company. I presume they're perfectly happen to hold my $200,000 even though I'm not making deposits. – Jay Mar 16 '18 at 14:44

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