Best broker for fractional shares – Fidelity
| Company |
Overall |
Minimum Deposit |
Fractional Shares |
 Fidelity
|
 |
$0.00 |
Yes |
Fidelity is my favorite broker for trading fractional shares in 2024, thanks to its meticulously designed order ticket and dedication to giving customers the lowest-cost executions. Fidelity’s platforms are simple, straightforward, and elegantly designed.
Fidelity’s “Basket Portfolios” feature makes setting up a basket of stocks, including fractional shares, easy. Basket Portfolios allow traders to automate recurring investments or rebalance, buy, or sell the entire basket. If you don’t want to set up your own basket, beginners can get started with prebuilt models provided by Fidelity.
I’ve found that Fidelity delivers value across its entire client experience and, in general, is a winner for beginner stock traders. Check out our Fidelity review to learn more.
500 "Stock Slices" available – Charles Schwab
| Company |
Overall |
Minimum Deposit |
Fractional Shares |
 Charles Schwab
|
|
$0.00 |
Yes |
Charles Schwab is a highly rated broker that got even better with its acquisition of TD Ameritrade. Now, Schwab customers have access to the powerful thinkorswim trading platform as well as a wide range of investment tools and educational resources.
Schwab’s fractional shares, called “Stock Slices,” allow investors to diversify their risks across a variety of different companies and industries. With over 500 stocks available, Stock Slices provide more than enough choices for individual stock investors. Fractional shares at Schwab come with a minimum purchase price of $5 and are available right from within the all-in-one trade ticket.
Learn more about why Schwab is one of our favorite brokers by checking out our Charles Schwab review.
Great for experienced traders – Interactive Brokers
Interactive Brokers (IBKR) is known for its professional-grade tools and global reach, offering an impressive range of investment options across 150 markets. It's a solid choice for experienced traders who want access to advanced features, low commissions, and the ability to trade in foreign markets.
Interactive Brokers offers multiple options for fractional share trading across its platforms, including on the TWS (Trader Workstation) for desktop and its IBKR GlobalTrader web and mobile platform.
Fractional share purchases for stock traders in the U.S. and Canada at Interactive Brokers have the same commissions as regular stock trading. IBKR Lite offers commission-free trading of U.S. stocks and ETFs and IBKR Pro provides two options for stock trading: a fixed rate commission of USD 0.005 per share (minimum USD 1.00 per order, capped at 1% of the trade value) and a tiered rate starting at USD 0.0035 per share (minimum USD 0.35, also capped at 1%).
It’s worth noting that you can’t currently practice trading fractional shares in a paper trading account at Interactive Brokers.
FAQs
What are fractional shares?
Fractional shares enable investors to own a percentage of a share of company stock. With fractional shares, investors and traders are not required to purchase at least one share in order to invest in a company.
As an example, let’s say you’ve decided to invest in Berkshire Hathaway Inc. (NYSE: BRK.B), which was priced at around $441.60, as of mid-August 2024. Maybe the price tag on that stock is simply too steep for you; not all traders can afford to pay over $400 for one share. With fractional shares, you can still invest in BRK.B by purchasing a percentage of one share. For example, if you decided that you could afford to invest $100, you could purchase 22.65% of one share at that price.
Are fractional shares worth it?
Yes, fractional shares can be worth it for investors and stock traders of all experience levels. Here are three reasons that fractional shares can have a place in any investor’s portfolio:
- Flexible investment: Fractional shares let you invest according to your budget. Investors can diversify a portfolio by buying multiple stocks without the budget requirements that would be necessary for buying full shares of each stock.
- Customizable portfolios: With fractional shares, you can create a personalized basket of stocks, similar to an ETF, tailored to your investment strategy. This customization can include specific allocations. For example, you might want to set a target weight of 12% for a given stock to allocate from your trading balance; you can purchase fractional shares to hit the exact 12% portfolio allocation.
- Convenience for all investors: Fractional shares aren't just for those on a tight budget. Even seasoned investors with substantial portfolios can benefit by making precise allocations without needing to round up to the nearest whole share.
Do fractional shares pay dividends?
Yes, in most cases you will earn fractional dividends if you own fractional shares (but it’s best to check with your broker to make sure). Your dividend will be proportional to the number of fractions of a share that you own.
Can you buy fractional shares of ETFs?
Yes, you can buy fractional shares of ETFs (Exchange-Traded Funds), making it easier than ever to invest in the stock market – regardless of your trading budget. This flexibility allows you to allocate any dollar amount toward your investment strategy, whether you're pursuing a passive approach with ETFs or engaging in more active trading.
For example, consider the Vanguard 500 Index Fund ETF (VOO), which aims to replicate the performance of the S&P 500 Index. At the time of this writing, VOO is priced at approximately $508.87. If you wanted to invest $250 per week in this ETF, you could set up a recurring purchase to either allocate that exact dollar amount using fractional shares.
Investing a fixed dollar amount instead of a specific fractional share can be a more consistent approach, especially given the fluctuations in ETF prices. This method allows you to buy into the ETF over time without worrying about the exact share price on the day of your purchase.
How do you buy a fractional share?
On most major platforms, buying a fraction of a share is no different than buying a whole share. In most cases, you’ll simply specify two extra decimals (or more if supported) to any whole number or zero (i.e., you might decide to buy 1.34 shares of a company stock). This is done in the order window before submitting your order for execution with a broker that supports fractional shares.
For example, on Fidelity’s web platform, you can either specify the dollar amount you wish to invest or the number of shares you want to buy. If you choose the dollar amount, the platform will automatically calculate the corresponding fractional share based on the current price of the stock. This flexibility makes it easy to invest exactly how much you want.
Here’s a step-by-step breakdown of the buying process:
- Choose a broker: First, ensure that your online stock broker supports fractional shares. Some of the best stock brokers, like Fidelity, Schwab, and Interactive Brokers offer the ability to buy fractional shares.
- Log in: Access your brokerage account using your credentials.
- Select the stock: Find the stock you want to buy. For example, you might search for “TSLA” for Tesla.
- Enter your order: Click on the option to buy shares of the selected stock. This will bring you to the order entry screen. You’ll need to specify the fraction of shares you want to buy, typically in decimals (e.g., 0.1 for a tenth of a share). You can also just enter the dollar amount you wish to invest. Most platforms will provide a real-time share percentage calculation based on the dollar amount.
- Review and submit your order: Once you’ve reviewed the order details, click on the “Buy” or “Submit” button to execute the trade. Your fractional shares will be added to your portfolio.
What brokers offer fractional shares?
Based on our hands-on testing, here is our full list of brokers that offer fractional shares in 2024 (in alphabetical order):
Our testing
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Steven Hatzakis is a well-known finance writer, with 25+ years of experience in the foreign exchange and financial markets. He is the Global Director of Online Broker Research for Reink Media Group, leading research efforts for ForexBrokers.com since 2016. Steven is an expert writer and researcher who has published over 1,000 articles covering the foreign exchange markets and cryptocurrency industries. He has served as a registered commodity futures representative for domestic and internationally-regulated brokerages. Steven holds a Series III license in the US as a Commodity Trading Advisor (CTA).
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Fidelity
Merrill Edge
E*TRADE
TradeStation
Interactive Brokers
Charles Schwab
tastytrade
eToro
