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Ask not what A. Lincoln did for you, but what a Lincoln can do for you? As of 2019, $3.2 billion worth of $5 bills were in circulation compared to $1.8 billion in 1999 according to the Federal Reserve Board [1]. On the day John Wilkes Booth assassinated the 16th President of the United States, nestled in Abraham Lincoln’s wallet alongside eight newspaper clippings, was a $5 confederate bill [2].

During the Civil War, it was not one single U.S. dollar that supported the entire U.S. economy. There were the greenbacks supported by the United States Government and the Confederate currency supported by the Confederate Government based out of Richmond, Virginia. It’s postulated that the $5 bill in Lincoln’s possession was a souvenir from his travels. On eBay, a similar $5 confederate bill from 1864 goes for $20 in 2021

In contemporary times, the current version of the $5 bill is a universal marker for fast-food chains to entice hungry customers. The most relevant of which is the once-popular $5 footlong promotion by Subway.  In February of 2021, Zachary Crockett wrote an interesting article in The Hustle titled, The rise and demise of Subway’s $5 footlong promotion. He presents a historical overview of the $3.8 billion innovation supported by its iconic jingle: five, five dollars, footlong, and the struggle to maintain such a promotion

Headquartered in Philadelphia, Pennsylvania, is a publicly-traded company, Five Below Inc (NASDAQ: FIVE), specializing in providing high-quality products for $5 or less. With over 1000 stores in 38 states [3], the company utilized the value of $5, created a niche store, and has returned over 600% for its shareholders since its debut in public markets back in July 2012. At the end of Fiscal Year 2020, the company reported decreased comparable sales and net income of 5.5% and 29.5%, respectively [4]. Still, it was able to open 120 new stores in a challenging economic climate showing the viability of its business model. 

Interestingly, $5 attractions and pleasures are not restricted to fast food and gadgets found in a $10 billion company’s retail locations. Recent historical shifts in the construction of trading platforms and brokerages to democratize investing have provided a different outlook for the simple five-dollar-bill. 

On January 29, 2020, Fidelity announced the availability of real-time fractional shares trading, which would allow “investors to trade as little as 0.001 of a share using Fidelity’s Mobile® app for iOS® and AndroidTM.” On June 02, 2020, Charles Schwab Corp announced the launch of Schwab Stocks Slices, allowing investors to “own any of America’s leading companies in the S&P 500® for as little as $5 each, even if their shares cost more.” Such programs allow investors to own fractional shares of companies whose price for one share might be out of reach due to high share prices. In addition to no-trading fees, fractional shares have democratized access to the stock market

For example, it would not be feasible for Sam, a new investor, who wanted to start investing with $5 and entered with the presumption of purchasing shares of many household names like The Home Depot Inc, Walmart Inc, Target Corp, Dollar General Corp, and Inc. The single share price of some of the companies listed above is higher than $100. Instead, through Fidelity or Schwab, Sam could invest $5 and add approximately 0.0368 shares of Walmart Inc to her portfolio. If Sam’s time horizon for her investing journey was for the long term, the availability of fractional shares provides something more significant. It provides access to indeed apply Newton’s First Law of Motion –every object persists in its state of rest or uniform motion in a straight line unless it is compelled to change that state by forces impressed on it.” Translation- if the $5 remains stationary, it maintains a static value, whereas investing it provides a transitory value. 

One of the first Exchanged Traded Funds in the stock market was the Spdr® S&p 500 Etf Trust. According to State Street Global Advisors, “The S&P 500 Index is a diversified large cap U.S. index that holds companies across all eleven GICS sectors.” The fund is benchmarked to the S&P 500, a collection of 500 of the most prominent publicly-traded companies in the United States. Purchasing into SPY is essentially an entry point into the entire stock market and replicating its results. 

State Street launched SPY in January 1993 [5], and its overall return to date excluding distributions is over 800%. While SPY replicates the performance of the S&P 500, there are two other U.S. Market indices that investors keep track of – Dow Jones Industrial Average and the NASDAQ Composite. The former and latter were created after S&P ETF and tracked with Spdr® Dow Jones Industrial (DIA) and Invesco Qqq Trust (QQQ). Comparing the overall return of each of the fund since inception renders the following chart –

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To know the historical performance of the market is good knowledge as it provides valuable information into the dynamics at play. The historical performance serves more as an indicator rather than a predictor.

For hypothetical purposes, let us assume that the combination of fractional shares and zero-commission trades were available since the inception of the SPY, DIA, and QQQ; Lincoln would look quite different, as shown by the graph below. 

Since inception, $5 invested in SPY, DIA, and QQQ would be worth approximately $45, $21, and $32, respectively. Yes, some stocks have delivered spectacular returns when compared to the broad market; but finding those stocks takes research, patience, a keen eye, and sheer luck. Evaluating the market from a fundamentals perspective allows its participants to judge the quality and gauge its relevance but not entirely predict. Participation in an ETF protects the investors from individual risks associated with a single stock. 

There is one drawback regarding fractional shares. Since they are fractional, if the individual chooses to switch their account to a different brokerage, fractional holdings are sold before transferring assets. For example, if one owned 1.53 shares of SPY in their portfolio and chose to switch from Brokerage A to Brokerage B, Brokerage A would sell the 0.53 shares before transferring the asset. Depending on the situation, this can be significant or can mean nothing. 

The three ETFs used in this example are not the only index-based ETFs available. Other institutions such as Vanguard, BlackRock, and others have ETFs that track the market as well. Not all ETFs are built equally, with some more actively managed than others. One can also find ETFs specific to certain sectors and industries. 

Lincoln’s power is different in 2021 than in 1993 due to a cloud and artificial intelligence-based zeitgeist filled with color commentary regarding market actions and antics. With a single Lincoln, a habit can be constructed that encourages foresight and proactivity. Admission into this sanguine paracosm forces the question of not what one can do with their monies, but what that money can do for you? 

The app Robinhood revolutionized the marketplace by introducing commission-free trading. A stark contrast to when every trade carried a commission. In February 2021, Maggie Fitzgerald from CNBC reported that the “free stock trading pioneerhad more than 3 million app downloads in the month of January, its highest on record, data showed. Coinbase had 1.3 million and China-owned Webull had more than 800,000 downloads” [6]. Included in her reporting is a historical graph representing the dominance Robinhood has witnessed in app downloads since January 2019. 

In March 2013, The Financial Times reported, Monkey beats man on stock market picks research from the Cass Business School in London. Author Chris Flood shares research from Prof.Clare on how nearly “army of monkey investors” [7] outperformed market-weighted indices. Does this mean that one should have ignored their instinct and not invested in a company like Apple Inc (NASDAQ: AAPL) in 1980 when its IPO price was $22? That’s the million-dollar conundrum every investor faces when uncertainty is posed. 

The S&P 500 is a globally accepted measure to gauge the United States Stock Market’s strength and durability. With as little as $5, one can gain entry into this environment and make their money work just as hard. Yes, investing is risky, and there are steps to doing investing correctly. If one has checked all the boxes leading up to starting up an investing journey, platforms such as Fidelity and Schwab offer very attractive entry points.


Author’s Note- The data shared in the essay is reflective of the results rendered till the date of publication. As of publication, I do not own shares of any of the stocks mentioned in the essay. Historical performance only serves as an indicator and teacher, not a predictor. The thoughts expressed are my personal opinions, and cannot be equated to personal advice. The essay was constructed for informational and educational purposes only. I encourage all readers to perform their own due diligence prior to investing.