What Are Fractional Shares?

Fractional shares allow you to buy a portion of a stock rather than a whole share. If a company's stock costs $500 per share but you only want to invest $50, you can buy 0.1 of a share.

How They Work

Many modern brokerages offer fractional share investing. You specify a dollar amount rather than a number of shares, and the brokerage handles the rest. You own a proportional claim on the stock's performance and dividends.

Why They Matter

Some of the most well-known companies have high share prices. Without fractional shares, investing in these companies would require hundreds or thousands of dollars per share, limiting access.

Benefits

• Accessibility: Invest any amount in any stock, regardless of share price
• Diversification: Spread a small amount across multiple companies instead of concentrating in one
• Dollar-cost averaging: Invest fixed amounts regularly without worrying about share prices

Limitations

Not all brokerages or markets support fractional shares. Availability varies by platform and region. Fractional shares may also have different rules around transferring between brokerages.