Where Can I Buy Fractional Shares?

Contributor, Benzinga

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You can buy fractional shares on the following platforms:

get started securely through public.com’s website
Best For
Trading Ideas
N/A
1 Minute Review

Public.com is an investing platform that helps people become better investors. Members can build a diverse portfolio of stocks, ETFs, and crypto within a single platform. Ownership unlocks an experience of content and education, contextual to their portfolio, created by an over million strong community of investors, creators, and analysts. 

Public puts investors first and doesn’t sell trades to market makers or take money from Payment for Order Flow (PFOF).

Best For
  • New investors looking to learn how to invest
  • Experienced investors looking to grow even further
  • Building a modern portfolio of stocks, ETFs, and crypto on one platform
Pros
  • Fractional shares and crypto
  • Transparency all around, from public portfolios to company beliefs
  • Supportive, educational community
Cons
  • No investing tools like futures, options, or margins
  • Day-trading is discouraged
  • Mobile app-based platform
get started securely through Charles Schwab’s website
Best For
Fund Investing
N/A
1 Minute Review

Charles Schwab is a solid choice for traders of all skill levels. It offers full access to the U.S. equity and options markets as well as 30 international markets. Traders can create a diverse portfolio with $0 commissions and no account minimums. Schwab’s margin trading is expensive but Schwab makes up for it with affordable futures and options trades, along with a comprehensive mobile offering.

Best For
  • 3 trading platforms perfectly in sync makes matching your platform to your skill level a snap
  • Excellent futures trading education for new traders
  • $0 account minimum means anyone can start trading
Pros
  • Wide range of available assets to trade, including futures and 30 global markets
  • SmartStreet Edge platform is powerful enough for advanced traders, yet easy enough for new traders to utilize
  • Unique educational resources (like infographics and podcasts) make learning fun
Cons
  • Margin rates are more expensive than competitors
  • More limitations on available margin than competitors
  • Expensive mutual funds
get started securely through M1 Finance’s website
Best For
Customizable Robo Investing
N/A
1 Minute Review

M1 Finance is a unique investing platform that allows investors to allocate their funds through a strategy called “pie investing.” When you open an account with M1, you can choose from 1 of 80 expert portfolio allocations, which the platform calls “pies.” Each pie is made up of a unique mix of stocks and ETFs and each represents a “slice” of your overall account.

Pies distinguish themselves by their asset allocation and investment choices. For example, investors who want to hold onto their investments until they retire might choose a pie with a focus on slow, steady growth, while investors who value corporate responsibility may want to choose M1’s socially responsible investment portfolio. 

You can also create your own pie by selecting individual stocks and ETFs. Every time you make a deposit into your M1 account, the broker will automatically divide your funds between your investments.

M1 offers only basic educational tools and its customer support leaves much to be desired. However, if you’re looking for a way to put your investments on autopilot, M1 Finance might be the right choice for you. 

Best For
  • Don’t want to take an active role in portfolio management
  • Need a large amount of hand-holding when it comes to selecting investments
  • Want the option to invest in a socially responsible portfolio
Pros
  • Pie investing system offers a unique visual component to investing
  • Streamlined mobile app offers full functionality of the desktop platform, plus access to M1’s banking components
  • Socially responsible portfolio option is perfect for investors who want to invest only in companies that offer positive business practices
Cons
  • No access to mutual funds, futures, forex or options investing
  • Limited charting tools and indicators
  • Poor customer service selection
  • Basic educational offerings cater only to very new investors

Shares of valuable companies can be expensive, especially hot ones like Amazon and Google. One share of Amazon currently costs over $1,800, so what’s the best way to make that happen, plus make sure your portfolio is diverse? Fractional shares could be your solution.

What are Fractional Shares?

Fractional shares are smaller portions of a stock equal to less than one share. Buy small fractions of shares and you can quickly build up a diverse portfolio of stocks without using mutual funds or ETFs. Fractional shares can sometimes be created after a 3/2 stock split or when a dividend is issued and immediately reinvested in a security.

Say you have 20 shares of SPY, the SPDR S&P 500 ETF. Currently, that’s a $5,500 investment at $280 per share. The SPY also has a 1.83% dividend yield, which means you’ll get about $5 in dividends per share for the year (or $1.25 each quarter). You also want those dividends reinvested into the ETF, but you only own 20 shares for about $50 in dividends per quarter. The share price is $280, but you’ll be allowed to buy 0.1785 shares of SPY with the $50 dividend you get each quarter.

If you have a dividend reinvestment program (DRIP) with the mutual funds in your 401(k), check out exactly how many shares of each you own. You might be surprised to find a number that stretches out three decimal places.

How You Can Benefit from Fractional Shares

  • Great for new or underfunded investors: Fractional shares offer a big boost for young investors, and now brokerage firms offer them up for purchase on the open market. You can quickly build a 50-stock portfolio without dropping $10,000 to open the account.
  • Eligible for dividends: One of the biggest benefits of buying stock from an established company is the consistent income it provides through dividends. When a company pays a dividend, it returns a portion of its profits to shareholders once every quarter. Fractional shares are eligible to receive these dividends as well, so you don’t need to own full shares to access this income.
  • Every penny can be invested: Ever get annoyed by that little bit of cash in your account that’s too small to buy a full share? With fractional shares, you can put every available cent into the market and leave nothing idle in your brokerage account.
  • Traded just like whole shares: Buy and sell fractional shares in the same manner as whole shares. There’s no minimum amount you have to buy or sell, and orders can be placed anytime during an open trading session.

What to Look out for with Fractional Shares

Not all aspects of trading fractional shares are positive. Here are a few drawbacks to buying pieces of shares instead of whole ones:

  • Can’t be traded on any brokerage: If you purchase fractional shares from your brokerage, chances are you will have to sell those shares on that same brokerage. Many brokerages do not support trading fractional shares, which limits how much trading can be done by the average investor.
  • Smaller purchases can lead to more fees: You won’t have to pay expenses to a mutual fund or ETF managers, but you’ll still need to pay brokerage commissions. Those commissions could be quite high if fractional shares are purchased repeatedly in small quantities.

Where You Can Buy Fractional Shares

Here are some great brokerages where you can buy fractional shares of stocks. It’s a mix of robo advisors and traditional brokerages.

Note that if you automatically reinvest dividends, fractional shares will show up from time to time in your brokerage account. You also might get a partial share after a 3/2 stock split, but brokerages often eat the remainder and give you cash instead.

1. M1 Finance

The pie is an investing method offered by M1 Finance that allows investors to set certain percentages on their account and buy stocks to meet those percentages.

For example, if you decide that you want 20% of your portfolio to be VOO, the Vanguard 500 ETF, then M1 will buy shares equal to 20% of your capital, including fractional shares if necessary. Or you can simply open an account and buy your fractional shares on your own, for free.

get started securely through M1 Finance’s website
Best For
Customizable Robo Investing
N/A
1 Minute Review

M1 Finance is a unique investing platform that allows investors to allocate their funds through a strategy called “pie investing.” When you open an account with M1, you can choose from 1 of 80 expert portfolio allocations, which the platform calls “pies.” Each pie is made up of a unique mix of stocks and ETFs and each represents a “slice” of your overall account.

Pies distinguish themselves by their asset allocation and investment choices. For example, investors who want to hold onto their investments until they retire might choose a pie with a focus on slow, steady growth, while investors who value corporate responsibility may want to choose M1’s socially responsible investment portfolio. 

You can also create your own pie by selecting individual stocks and ETFs. Every time you make a deposit into your M1 account, the broker will automatically divide your funds between your investments.

M1 offers only basic educational tools and its customer support leaves much to be desired. However, if you’re looking for a way to put your investments on autopilot, M1 Finance might be the right choice for you. 

Best For
  • Don’t want to take an active role in portfolio management
  • Need a large amount of hand-holding when it comes to selecting investments
  • Want the option to invest in a socially responsible portfolio
Pros
  • Pie investing system offers a unique visual component to investing
  • Streamlined mobile app offers full functionality of the desktop platform, plus access to M1’s banking components
  • Socially responsible portfolio option is perfect for investors who want to invest only in companies that offer positive business practices
Cons
  • No access to mutual funds, futures, forex or options investing
  • Limited charting tools and indicators
  • Poor customer service selection
  • Basic educational offerings cater only to very new investors

2. Charles Schwab

Anytime you buy fractional shares through Schwab Stock Slices, you can buy a single slice or up to 10 slices for as little as $5 per slice. Schwab Stock Slices operate on a commision-free basis, as with regular stocks.

If you already have a Charles Schwab account you can buy fractional shares now. If you don’t have an account, you can create one here.

The stocks available through Schwab Stock Slices are in the S&P 500 which includes the 500 leading large-cap U.S. publicly traded companies.

get started securely through Charles Schwab’s website
Best For
Fund Investing
N/A
1 Minute Review

Charles Schwab is a solid choice for traders of all skill levels. It offers full access to the U.S. equity and options markets as well as 30 international markets. Traders can create a diverse portfolio with $0 commissions and no account minimums. Schwab’s margin trading is expensive but Schwab makes up for it with affordable futures and options trades, along with a comprehensive mobile offering.

Best For
  • 3 trading platforms perfectly in sync makes matching your platform to your skill level a snap
  • Excellent futures trading education for new traders
  • $0 account minimum means anyone can start trading
Pros
  • Wide range of available assets to trade, including futures and 30 global markets
  • SmartStreet Edge platform is powerful enough for advanced traders, yet easy enough for new traders to utilize
  • Unique educational resources (like infographics and podcasts) make learning fun
Cons
  • Margin rates are more expensive than competitors
  • More limitations on available margin than competitors
  • Expensive mutual funds

3. Public.com

Public.com is a unique trading platform that makes it easy to access fractional shares and crypto. The platform makes it easy to build a diverse portfolio, offering even more than fractional shares and crypto, including: no fees, powerful investing categories and an easy-to-use interface.

Check out Benzinga’s dedicated review of Public.com here.

get started securely through public.com’s website
Best For
Trading Ideas
N/A
1 Minute Review

Public.com is an investing platform that helps people become better investors. Members can build a diverse portfolio of stocks, ETFs, and crypto within a single platform. Ownership unlocks an experience of content and education, contextual to their portfolio, created by an over million strong community of investors, creators, and analysts. 

Public puts investors first and doesn’t sell trades to market makers or take money from Payment for Order Flow (PFOF).

Best For
  • New investors looking to learn how to invest
  • Experienced investors looking to grow even further
  • Building a modern portfolio of stocks, ETFs, and crypto on one platform
Pros
  • Fractional shares and crypto
  • Transparency all around, from public portfolios to company beliefs
  • Supportive, educational community
Cons
  • No investing tools like futures, options, or margins
  • Day-trading is discouraged
  • Mobile app-based platform

Final Thoughts on Fractional Shares

Fractional shares are a great way for you to put every dollar to work when constructing a portfolio. You can get exposure to a broad range of securities. However, be sure you aren’t overtrading and as a consequence, racking up commissions. Make sure your broker has a reasonable list of fees, otherwise it defeats the purpose of fractional shares.