Fractional shares make investing more accessible by lowering the barrier to entry for high-dollar stocks, every stock really, but not all brokers offer this feature. Here’s what you need to know about investing with fractional shares and which brokers provide this valuable feature.
Fractional shares are slices of whole shares, letting you invest with a specific dollar amount instead of having to buy in at the stock’s full share price. Fractional shares are available for stocks, exchange-traded funds (ETFs) and cryptocurrency.
Fractional shares can also be created as a result of stock splits, company mergers and dividend reinvestment plans. But not all brokers offer access to fractional share trading – i.e. the ability to actively trade fractions of shares instead of whole shares.
Fractional shares provide an opportunity for investors to build portfolios with stocks, ETFs and crypto that may have previously been out of reach.
For example, Berkshire Hathaway Inc Class A (BRK.A) shares, one of the most expensive stocks to ever trade, closed at $527,750 on October 17, 2023. Fractional share trading lets you invest in stocks like this, often for as little as $1, instead of needing $527,750 for one share.
You’ll need to open a brokerage account with a platform that offers fractional share trading. Fractional share trading is available with several self-directed brokerage accounts and robo-advisors.
Once you’ve opened and funded your account, invest in fractional shares by following these steps:
If you’re looking for a new brokerage account, compare your options using the table below.
Yes, you can. Fractional share dividends will be split based on the portion of a share that you own. So if shareholders will receive $1 per share in dividends, then owning half a share will get you 50 cents in dividends. It’s worth noting that if rounding means that you’re due less than a penny in dividends, you’re unlikely to see it hit your account.
Both penny stocks and fractional shares can cater to the low-dollar investor, but that’s where their similarities end.
Fractional share trading is a feature that lets you invest with specific dollar amounts. Penny stocks are stocks of companies that cost less than $5 per share. You can buy fractional shares of penny stocks just as you can any other stock.
Fractional shares make investing more accessible by letting you invest with a specific dollar amount instead of having to buy in at the stock’s full share price. Fractional shares are available for stocks, ETFs and cryptocurrency.
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