• Skip to primary navigation
  • Skip to main content
Good Financial Cents®
Content is based on in-depth research & analysis. Opinions are our own. We may earn a commission when you click or make a purchase from links on our site. Learn more.
  • Make Money
    • Get Money Now
      • Ultimate Guide to Making Money
      • Need Money Now
      • Get Free Money Fast
      • Make Money Fast
      • Make $1K Per Month
      • Make $100 Per Day
    • Control Your Destiny
      • Self Employed Jobs
      • Make Money from Home
      • Hobbies That Make Money
      • How to Become a Freelance Writer
      • Small Business Ideas to Start
      • How to Become an Independent Contractor
      • Best Online Jobs
    • Passive Income
      • Passive Income Ideas
      • Multiple Streams of Income
      • Extra Income
      • Residual Income Ideas
      • Learn to Sell e-Books
      • Make Money on Facebook
      • Make Money on Tiktok
      • Best Online Survey Sites to Make Money
    • Explore More
      • Best Side Hustle Ideas
      • Make Money for Teens
      • Best Online Colleges
      • Best Jobs No College Degree
      • Become a Millionaire
      • Careers for the Future
  • Manage Money
    • Best Of
      • Budgeting Tools
      • Personal Finance Software
      • Best Cashback Cards
    • Company Reviews
      • Personal Capital vs Mint
      • Personal Capital Review
      • SmartAsset Review
    • Guides
      • Buy or Lease a Car
      • What is Liquid Net Worth?
      • Setting Financial Goals
      • How to Budget
      • Ways to Save Money
    • Explore More
      • How Much Car Can I Afford?
      • Best Auto Refinance Companies
  • Invest
    • Best Of
      • Best Short and Long-Term Investments
      • Best Low Risk Investments
      • Best Online Stock Brokers
      • Best Crypto Exchanges
      • Best Short Term Investments
      • Best Long Term Investments
      • Best Trading Platforms
      • Best Investment Apps
    • Company Reviews
      • Lending Club
      • Robinhood
      • M1 Finance
      • Ally
      • TD Ameritrade
      • Fundrise
      • Betterment
      • Etrade
      • Wealthfront
    • Guides
      • Investing for Beginners
      • Investing Small Amounts of Money
      • Investing in Real Estate
      • No Money Down Real Estate
      • Bonds vs Stocks
      • Peer to Peer Lending
      • Best Hedges Against Inflation
      • Safe Bitcoin Investing in 2023
    • Explore More
      • Bitcoin vs. Real Estate
      • Betterment vs Wealthfront
      • Investing for College Students
      • Stock Market Alternatives
    • By Investment Amount
      • How to Invest $100
      • How to Invest $1K
      • How to Invest $2k-$3k
      • How to Invest $5K
      • How to Invest $10K
      • How to Invest $15k
      • How to Invest $20K
      • How to Invest $30k
      • How to Invest $50K
      • How to Invest $100K
      • How to Invest $200K
      • How to Invest $500K
      • How to Invest $1M
  • Taxes
    • Best Of
      • Best Tax Relief Companies
      • Best Tax Software
    • Guides
      • Federal Income Tax Guide 2023
      • Taxes and Cryptocurrency
      • How to Do Your Own Taxes
      • How to Invest Your Tax Refund
      • Hiring a Professional Tax Preparer
      • Tax Tips for Freelancers
    • Company Reviews
      • TurboTax Review
      • H&R Block Review
      • Taxslayer
      • Tax Act
  • Insurance
    • Best Of
      • Best Life Insurance
      • Best Home Insurance
      • Best Auto Insurance
      • Cheap Term Life Insurance
      • Car Insurance For Young Adults
    • Guides
      • Term vs Whole Life
      • Different Types of Car Insurance
      • Average Cost of Car Insurance
    • Explore More
      • Life Insurance Over 50
      • Life Insurance Over 80
      • $1 Million Life Insurance
      • $2 Million Life Insurance
      • $3 Million Life Insurance
    • Company Reviews
      • Banner Life Insurance
      • Ladder Life Insurance
      • Health IQ
      • Haven Life
      • Policygenius
      • State Farm Auto Insurance Review
  • Retirement
    • Roth IRA
      • Best Places to Open a Roth IRA
      • Best Investments for Roth IRA
      • 7 Roth IRA Secrets
      • Roth IRA Conversion Guide
      • Roth IRA Rules
      • Roth IRA vs Roth 401k
      • Are Roth IRA Contributions Tax Deductible?
    • 401(k)
      • 401(k) Limits
      • 401(k) to Roth Rollover
      • Is 401(k) Enough for Retirement?
      • Maxed Out 401(k): What's next?
    • Traditional IRA
      • Traditional IRA Rules and Limits
      • Traditional IRA vs. 401(k)
      • Simple IRA Rules
      • SEP IRA Rules
      • How Much Do You Need to Start an IRA?
    • Explore More
      • SEP IRA vs. Roth IRA
      • 457 Plan for Successful Retirement
      • 401a Rollover Rules
      • How to Retire at 50
      • How to Retire at 55
  • Banking
    • Best Of
      • Best National Banks
      • Best High-Yield Savings Accounts
      • Best Checking Accounts
      • Best Savings Accounts
      • Best CD Rates
      • Best Money Market Accounts
    • Company Reviews
      • BBVA
      • Synchrony
      • Wells Fargo
    • Explore More
      • 9 Banking Alternatives for 2023
      • What is a Credit Union?
  • Home
    • Best Of
      • Best Mortgage Lenders
      • Best Mortgage Refinance Companies
      • Best Home Warranties
      • Best Homeowners Insurance
      • Best VA Loans
      • Best Mortgage Rates
      • Best Moving Companies
      • Best Home Security
    • Guides
      • Home Buying Checklist
      • Online Home Appraisal
      • How Much House Can I Afford?
      • First-time Homebuyer Programs
      • How to Get Approved for a Home Loan
      • Save Money When Building a House
      • How to Save for a Downpayment
      • When to Refinance Your Mortgage
    • Explore More
      • 15 vs. 30-year Mortgage
      • Home Warranty vs. Home Insurance
      • Veterans United Home Loan Review
      • Quicken Loans Review
      • HELOC vs Second Mortgage
      • DCU Mortgage Review
      • Costco Mortgage Program Review
      • USAA Mortgage Loan Review
  • Credit
    • Best Of
      • Best Credit Repair Companies
      • Best ID Theft Protection Services
      • Best Credit Report Options
      • Best Bad Credit Loans
    • Guides
      • How to Build Your Credit Score
      • How to Raise Your Credit Score in 5 Months
      • How to Dispute Your Credit Report
      • Hot to Remove Collections from Your Credit Reports
      • How Identity Theft Destroys Your Credit Score
    • Explore More
      • What is a Good Credit Score?
      • What is a Bad Credit Score?
  • Debt
    • Best Of
      • Best Debt Consolidation Loans
      • Best Personal Loans
      • Best Student Loans
      • Best Student Loan Refinance
    • Guides
      • What is Debt Consolidation?
      • How to Get Out of Debt
      • How to Get a Personal Loan Approved
      • How to Pay Off Student Loans Faster
      • Should I Consolidate My Debts?
      • Should I File for Bankruptcy?
    • Company Reviews
      • Credible
      • Sofi

Fractional Shares: What They Are and How to Buy Them

https://secure.gravatar.com/avatar/b0d295f9857bcc5e3800911570a7fa20?s=100&d=mm&r=g
  • Written By:
    Holly Johnson

    Holly Johnson

    Holly Johnson is the founder of Club Thrifty, a personal finance and travel resource geared to families who want to...

    Read More
  • Updated: February 6, 2023
  • 5 Min Read
  • Advertising Disclosure

    Advertising Disclosure

    GoodFinancialCents® has an advertising relationship with the companies included on this page. All of our content is based on objective analysis, and the opinions are our own. For more information, please check out our full disclaimer and complete list of partners.

Quality Verified THE GFC® PROMISE
shield check icon
Quality Verified

GoodFinancialCents® partners with outside experts to ensure we are providing accurate financial content.

These reviewers are industry leaders and professional writers who regularly contribute to reputable publications such as the Wall Street Journal and The New York Times.

Our expert reviewers review our articles and recommend changes to ensure we are upholding our high standards for accuracy and professionalism.

Our expert reviewers hold advanced degrees and certifications and have years of experience with personal finances, retirement planning and investments.

shield check icon
Why You Can Trust GoodFinancialCents®

GoodFinancialCents® partners with outside experts to ensure we are providing accurate financial content.

These reviewers are industry leaders and professional writers who regularly contribute to reputable publications such as the Wall Street Journal and The New York Times.

Our expert reviewers review our articles and recommend changes to ensure we are upholding our high standards for accuracy and professionalism.

Our expert reviewers hold advanced degrees and certifications and have years of experience with personal finances, retirement planning and investments.

Some of today’s hottest stocks come at a steep price that can make it difficult to get started in investing. If you want to buy stock in Google, Facebook, or Tesla, for example, you’ll have to pony up several hundred dollars just to buy a single share. 

To be clear, you can often open an investing account with a major brokerage firm with $0. The problem is, how do you actually invest your initial nest egg when the stocks you want to buy are beyond your reach?

The answer for many beginning investors is “fractional shares”. 

Ads by Money. We may be compensated if you click this ad.AdAds by Money disclaimer
Robo-Advisors move with the market to ensure your investments.
Robo-advisors offer easy account setup, robust goal planning, account services, and portfolio management all at a reasonable price - start investing today by clicking on your state.
HawaiiAlaskaFloridaSouth CarolinaGeorgiaAlabamaNorth CarolinaTennesseeRIRhode IslandCTConnecticutMAMassachusettsMaineNHNew HampshireVTVermontNew YorkNJNew JerseyDEDelawareMDMarylandWest VirginiaOhioMichiganArizonaNevadaUtahColoradoNew MexicoSouth DakotaIowaIndianaIllinoisMinnesotaWisconsinMissouriLouisianaVirginiaDCWashington DCIdahoCaliforniaNorth DakotaWashingtonOregonMontanaWyomingNebraskaKansasOklahomaPennsylvaniaKentuckyMississippiArkansasTexas
Start Investing Today

What Are Fractional Shares?

Fractional shares are a type of investment that let you invest with a small amount of money. With fractional shares, you can buy a “piece” or a “slice” of a stock instead of a full share. 

Fractional shares can come about after a stock split, from dividend reinvestment plans (DRIPs), or from other actions that businesses take. However, some of the top online brokerage firms also buy full shares or fractional shares and sell a percentage to their customers. This lets investors buy into stocks that are primed for growth but they cannot afford otherwise. 

According to Robinhood, a free investing platform that sells fractional shares, investors can expect to purchase fractional shares that are as small as 1/1,000,000 of a share. Fractional shares from Robinhood can be purchased for as little as $1 as a result. 

Acorns is another investing platform that lets you build wealth through what they call “micro-investing,” which is just another name for fractional shares. With Acorns, you link your credit and debit cards to your account, and Acorns rounds up your purchases and sets aside your spare change. Once you have $5 in your account, the money gets invested in a portfolio of your choosing, which typically includes fractional shares. 

Like other types of investments, you can buy or sell fractional shares over time. This means you can continue adding to your arsenal of fractional shares to build long-term wealth, or sell fractional shares to lock in gains.

Benefits of Fractional Shares

Why would you want to buy a portion of a stock in the form of a fractional share? Here are some of the main advantages.

1. Invest in Popular Stocks with Little Money Upfront

The main advantage of fractional shares is the fact that you can “buy-in” to more expensive stocks without coming up with the total amount for one full share. For example, Amazon stock (AMZN) is trading at $3,118.06 as of this writing, but fractional shares can let you invest in Amazon for a few bucks with the right platform. 

2. Diversify Your Portfolio with Ease

Fractional shares also make it considerably easier to diversify. After all, you can take an initial investment amount of $100 and spread it across multiple stocks or ETFs using fractional shares. Without this option, diversifying small amounts of money across multiple investments becomes significantly harder.

Should You Invest All Your Money in Stocks?

3. Invest What You Have

Fractional shares let you invest with whatever amount you have. If you have $500 or $1,000 in cash to get started, for example, fractional shares lets you invest the entire amount and diversify in the process. Without fractional shares, you would be stuck figuring out which exact stocks to buy that would be close to your initial investment amount. 

Disadvantages of Fractional Shares

Although investing in fractional shares might seem like a no-brainer, there are plenty of issues you might run into along the way. Consider these downsides before integrating fractional shares into your investment plan.

1. Fees Can Add Up Quickly

One potential downside of fractional shares is the fact that you could potentially rack up a lot in fees. This is especially true if your brokerage firm charges commissions and you wind up making a lot of trades. Before investing in fractional shares, look for a brokerage account with low or minimal trading fees. In terms of which brokerage firms stand out, Robinhood and Public are good options for commission-free stock trading.  

2. Not As Widely Available

Not all brokerage firms offer fractional shares. For example, you can’t open a brokerage account with Vanguard and buy fractional shares directly from its platform. If you want to invest small amounts of money and buy portions of stock at a time, you’ll have to choose among brokerage firms that offer fractional shares as an investment.

When It Make Sense to Invest in Fractional Shares

Investing in fractional shares makes sense if you’re a beginning investor who only has a small amount of money to get started. You can open an investment account and begin buying fractional shares for as little as a few dollars. When you can afford to, you can always graduate to buying full shares of your favorite stocks later on. 

Make sure to research brokerage firms that allow fractional shares, keeping in mind factors like investment options, investing tools, and fees. 

Where to Invest in Fractional Shares

Plenty of brokerage firms let you invest in fractional shares, although each one works a little differently. Before investing into fractional shares, compare all of the best platforms that offer this option.

Robinhood

Robinhood can be a solid choice for fractional share investing since they offer commission-free trading. You can invest in fractional shares of thousands of stocks for as little as $1, and you can use the app to make real-time trades. Robinhood is also free of minimum account balance requirements, so you can begin investing without having to build up a large amount of cash. 

Ads by Money. We may be compensated if you click this ad.AdAds by Money disclaimer
Robinhood Robo-Advisor
Investing for Everyone
Get Started at Robinhood

Acorns

Acorns is a little different because it helps you invest by rounding up your purchases and setting aside small amounts of change on your behalf. Once you begin building savings with Acorns, it helps you invest using small sums of money. There’s no minimum account balance required to open an Acorns account, though to invest your round-ups need to reach a $5 minimum. Investing plans for individuals costs $1 or $3 per month. 

Ads by Money. We may be compensated if you click this ad.AdAds by Money disclaimer
Acorns Robo-Advisor
Invest in your future today with Acorns.
Start Investing
ADVERTISEMENT

Public

Public also offers commission-free trading, fractional share investing starting at $5, and a helpful mobile app. This platform also has a social media element that helps you learn to invest and learn alongside others with similar interests as you. There are no minimum account requirements to get started, either. 

Stockpile

Stockpile is another platform that makes it easy to buy fractional shares, although this brokerage is geared to people who want to give stock as gifts. According to Stockpile, you can choose from thousands of stocks and invest with as little as $5. You can also receive your investment in the form of a gift card, which you can give out for the holidays, birthdays, or any other special occasion. 

The Bottom Line

Buying fractional shares makes a ton of sense if you have little money upfront to invest, or even if you just want to diversify. After all, having hundreds or thousands of slices of individual stocks can leave you considerably more diversified than owning just a few whole shares. 

If you’re hoping to invest soon and want to get started right away, plenty of online brokerage firms offer fractional share investing with no commissions and no (or minimal) fees. Make sure to compare all the best investing apps and platforms before you decide. 

Fractional Shares FAQs

Still want to learn more about fractional shares? These frequently asked questions and answers can help.

You can buy fractional shares of ETFs or dividend stocks, but your options could be limited based on the brokerage firm you open an account with. Keep in mind that, if you buy a fractional share of a dividend stock, your dividends paid out will equal the fractional amount you own.

Some platforms let you invest in fractional shares for as little as $1 or $5. Make sure to compare options if you’re getting started with a small amount of cash. Also, check among brokerage firms for minimum account balance requirements that can force you to save up a set amount of money before you can open an account.

Plenty of brokerage firms offer fractional shares, but the right one for you depends on what you hope to accomplish, where you want to invest, and your preferred investing experience. Ideally, you’ll find a brokerage firm that lets you get started by investing with the amount you have, with no account fees or commissions.

Fractional shares are just as worthwhile as investing into full shares of stock. You’re just getting started with a lower amount, which you can build on and grow over time. For beginning investors, fractional shares can mean the difference between getting started on a path to wealth or waiting potentially years before you can afford full shares.

Facebook LinkedIn Twitter

About the Author

Holly Johnson is the founder of Club Thrifty, a personal finance and travel resource geared to families who want to make the most of their incomes while seeing the world.

She is also the co-author of budgeting book Zero Down Your Debt: Reclaim Your Income and Build a Life You'll Love. The book explains the step-by-step process behind zero-sum budgeting, which is the type of budget Johnson and her husband used to pay off debt in their 20's so they could begin building their investment portfolio in their 30's and 40's.

Before beginning a career in personal finance, Johnson worked in the funeral industry alongside her husband Greg. She attended Ball State University in Muncie, Indiana, and she was given the Best Contributor/Freelancer for Personal Finance at the 6th annual Plutus Awards Ceremony in 2015.

Johnson is an investment expert who built and manages her own seven-figure portfolio, and she frequently writes about various investment strategies as a result. She also covers credit cards, loans, insurance and other banking topics for publications like Forbes, CNN Underscored, U.S. News and World Report, Bankrate, and more.

Highlights:

*Award-winning personal finance writer
*Author of budgeting book, Zero Down Your Debt: Reclaim Your Income and Build a Life You'll Love
*Owner of finance and travel site ClubThrifty.com
*Owner of freelance writing course, EarnMoreWriting.com
*Regular contributor to CNN, Forbes, Bankrate, and more

Facebook Twitter LinkedIn


You Might Also Enjoy

What Is The SIPC and How Does it Protect Your Investments?

What Is The SIPC and How Does it Protect Your Investments?

What Happens When Your Bank is Seized by the FDIC?

What Happens When Your Bank is Seized by the FDIC?

How to Invest $200,000 and Generate a Solid Return

How to Invest $200,000 and Generate a Solid Return

Webull Review: Trade Crypto and Traditional Investments on the Same App

Webull Review: Trade Crypto and Traditional Investments on the Same App

How To Diversify Your Portfolio With Artwork In 2023

How To Diversify Your Portfolio With Artwork In 2023

10 Best Investment Companies in 2023

10 Best Investment Companies in 2023

Leave a Reply

Cancel reply

  • Make Money
  • Manage Money
  • Invest
  • Taxes
  • Insurance
  • Retirement
  • Banking
  • Home
  • Credit
  • Debt
  • About
  • Contact
  • Facebook LinkedIn Twitter

© 2023 Good Financial Cents®. All Rights Reserved. | Privacy Policy | Disclaimer

All written content on this site is for information purposes only. Opinions expressed herein are solely those of AWM, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation.

All third party trademarks, including logos and icons, referenced in this website, are the property of their respective owners. Unless otherwise indicated, the use of third party trademarks herein does not imply or indicate any relationship, sponsorship, or endorsement between Good Financial Cents® and the owners of those trademarks. Any reference in this website to third party trademarks is to identify the corresponding third party goods and/or services.