What Are Fractional Shares?

Fractional Shares are pieces of a whole share of a company. With fractional shares, you can buy stocks not only by quantity, but also by dollar amount. For example, if an investor intends to invest about $5 in a stock currently trading at $100, they can place an order by entering an amount of $5, or 0.05 share.

Why do people buy fractional shares?

To invest in high-priced companies

Many investors find big companies, especially blue chips, too expensive to access. With fractional shares, investing in big companies is more accessible. They’re able to invest in big companies with as little as $5. Just remember, you can still lose all or more of your investment regardless of the size of your investment.

To build a diversified portfolio

Investors are able to invest in more companies with a limited capital. For example, $100 can only be used to buy one whole share trading at $100. With fractional shares, a person can invest in up to 20 different companies with the same amount of money.