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What Is the Best Brokerage for Fractional Shares Investing?

As investing in the stock market continues to grow in popularity, the investing needs and asks of the general public continue to evolve as well. In today’s modern world, you can buy and sell stocks all from your smart phone!

As stock prices continue to rise, purchasing a share may become increasingly more challenging for individuals. For example, consider the price of a single share of stock for Amazon, which closed at $3,221 on October 5th, 2021.

If you’ve ever wanted to purchase a stock that was out of your price range, consider purchasing fractional shares of the company. What are fractional shares, and what is the best brokerage for fractional shares investing? We’ll be covering that below! 

Quicklook: Best Brokerage for Fractional Share Investing

  1. M1 Finance: Best for Their Unique Investor Tools
  2. Interactive Brokers: Best for Global Investors
  3. SoFi: Best for Housing All Financial Services Under One Roof
  4. Fidelity: Best for Those Just Starting Out
  5. Charles Schwab: Best for Fractional Shares of Companies on the S&P 500
  6. RobinHood: Best for a Mobile Option
  7. Webull: Best for Free Stock Trading 

Table of Contents

7 Best Brokers Offering Fractional Shares

We’ve surveyed the available options and isolated the best brokerages for fractional shares investing below. 

M1 Finance 

M1 Finance

Best for Their Unique Investor Tools 

M1 Finance is more than just a registered broker-dealer. M1 Finance has various investor tools that help you maximize the most out of your money. This includes checking accounts that earn cash back, and low rates on lending! M1 Finance was founded in 2015, and currently has $5 billion in assets under management. 

Minimum Investment: You can open a standard account for as little as $100. A retirement account will require a minimum deposit of $500. 

Fractional Dividend Reinvestment: Yes

Fractional Shares Available: M1 Finance is constantly adding new companies to their fractional share options. Currently, there are a few hundred companies that fall within this category. 

Standout Features: The best feature of M1 Finance is now they are more than just a broker-dealer. M1 Finance also offers checking account options, which will provide cash back for every dollar spent. They have a wide range of investment tools that can help you increase your knowledge of finance, and how money can work for you. 

Benefits:

  • Their app is straight forward and easy to use 
  • You can do all your finances under one roof, including a checking account, securing loans, and expanding your financial knowledge 
  • You can enroll in auto invest 

Disadvantages:

  • M1 Finance isn’t well known for strong customer service, there is minimal support and customers are often forced to find their own answers online
  • Investment options are also limited to stocks and ETFs, which is fine for plenty of investors, but if you wanted to buy/sell crypto, forex, or futures, you wont be able to do so 

Interactive Brokers

Interactive Brokers

Best for Global Investors

Financial markets exist all over the globe. In fact, at any given moment of the day, a financial market is open somewhere in the world. If the idea of investing in various countries financial markets appeals to you, Interactive Brokers may be the perfect brokerage to partner with. 

Minimum Investment: The minimum deposit amount is contingent on what type of account you open. For regular accounts, individual accounts, or a joint account, there is no minimum deposit. If you need a broker account, you must deposit $10,000. 

Fractional Dividend Reinvestment: Yes

Fractional Shares Available: There is a wide range of securities available for fractional shares investing and trading. Their complete list can be found online, but stocks listed on the NYSE, AMEX, NASDAQ, ARCA, and BATS are all eligible for fractional shares investing. 

Standout Features: Interactive Brokers worldwide exposure is its best feature. You can invest in 135+ markets in 33 countries! 

Benefits:

  • You’ll have worldwide access to various securities, stocks, and markets 
  • Their website and mobile app is robust, and filled with great information
  • You have plenty of options for fractional shares investing 

Disadvantages:

  • Without question, this is a sophisticated platform. It may take some adjusting too, or deep training. 
  • You must be mindful of the fees. This is not a free brokerage option. 

SoFi 

Best for Housing All Financial Services Under One Roof

SoFi is a complete personal finance company. Not only can you invest with SoFi, you can also receive a; personal/home/auto/student loan, learn credit score boosting techniques and budgeting tips, and manage all your money within their app or website. 

Minimum Investment: There is no minimum deposit required. 

Fractional Dividend Reinvestment: Yes

Fractional Shares Available: There are over 4,000 companies you can buy fractional shares in with SoFi! 

Standout Features: SoFi’s standout feature is without question how robust their personal finance options are. You can literally do everything regarding personal finance under the SoFi roof, helping you better manage your finances and take control of your future. 

Benefits:

  • SoFi leverages cutting edge technology
  • SoFi allows you to buy fractional shares in over 4,000 companies
  • There is a wealth of information on SoFi’s website, which can help you gain more control of your finances and make better financial decisions 

Disadvantages:

  • This is a very basic investing option
  • With the above said, SoFi lacks technical analysis tools 

Fidelity

Fidelity

Best for Those Just Starting Out

Fidelity is another excellent option for those looking to invest in fractional shares. Not only do they provide unique benefits to a younger demographic, they are also well known for their retirement planning tools. Fidelity was founded in 1946 and today has over $4 trillion dollars in assets under management. 

Minimum Investment: There is no minimum deposit. 

Fractional Dividend Reinvestment: Yes

Fractional Shares Available: Stocks by the Slice is Fidelity’s fractional shares investing option. You can trade stocks on the NYSE or Nasdaq by the slice! 

Standout Features: Fidelity has tools in place to help you do your own investing, but gives you access to an advisor if needed. This is why its such a strong option for those just starting out. 

Benefits

  • The Stocks by the Slice option is excellent!
  • You can speak with an advisor if you needed to 
  • You will not pay a trading commission for online trades 

Disadvantages:

  • Fidelity does not have a wide range of technical analysis tools
  • The platform itself is rather basic. As you build trading experience and knowledge, you may want something more advanced. 

Charles Schwab 

Charles Schwab

Best for Investing in Fractional Shares for Companies in the S&P 500

If you want to invest in companies on the S&P 500, Charles Schwab may be the perfect option for you. Charles Schweab was initially founded in 1971, and has now become one of the most iconic names in the investing world. Present day, Charles Schwab has $7.5 trillion dollars in assets under management, an astronomical number! 

Minimum Investment: There is no minimum investment to open an account, but various trading techniques or securities will have an investment minimum. 

Fractional Dividend Reinvestment: Yes

Fractional Shares Available: Charles Schwab offers over 500 companies where you can buy fractional shares, including all the companies in the S&P 500. 

Standout Features: The most special feature must be the expansive range of companies you can buy fractional shares from.

Benefits:

  • There an an abundance of investor tools you can use
  • Fractional shares investing is made easy with Chalres Schwab 
  • You do not pay a trading commission for stock and ETF trading/investing

Disadvantages:

  • Finding a disadvantage is challenging, considering how strong of an option this is. However, if we had to drill down on one it must be their day trading ability. You can day trade with Charles Schwab, but they are more known and respected as an investment brokerage.

RobinHood

Best for a Mobile Option

Robinhood

In a world so dependent on the smartphone, who wouldn’t want to be able to trade/invest all from the palm of their hand? RobinHood was initially founded in 2013, and has grown to be a common option for those who want to have a robust mobile platform for their trading and investments. Not only does RobinHood have investing options, they also have cash management tools that can help you keep your finances in balance. 

Minimum Investment: There is no account minimum. 

Fractional Dividend Reinvestment: Yes

Fractional Shares Available: With RobinHood, you can invest in thousands of stocks, including fractional shares, with just $1. 

Standout Features: If you are like most people and spend a lot of time looking at your smartphone, you’ll enjoy the RobinHood app. This app is neatly laid out and is a great option for those in a hurry, or those who are looking to make financial decisions all from their smartphone. 

Benefits:

  • Their mobile app is quick, easy to use, and organized 
  • There are thousands of companies you can invest in with just $1
  • RobinHood has a cash management product which everyone can benefit from 
  • You can also invest in cryptocurrency with RobinHood

Disadvantages:

  • There is limited educational material 
  • Despite how beautiful their mobile app is, it doesn’t not have a lot of technical analysis tools 
  • RobinHood does provide more investing options than other alternatives, but not nearly as much as other well known and respected brokerages 

Webull

Best for Free Stock Trading

Webull

Does the thought of paying a trading commission make you sick? If so, Webull is the perfect brokerage for you. WeBull is a high tech investment platform that allows you to invest in a variety of securities for no fees whatsoever! 

Minimum Investment: A margin account will require a minimum deposit of $2,000, but a regular account does not have a minimum requirement. 

Fractional Dividend Reinvestment: Yes

Fractional Shares Available: The fractional shares options WeBull offers is virtually endless. 

Standout Features: The fact that WeBull levels the playing field with a zero commission fee policy is by far their most noteable featuure. 

Benefits:

  • WeBull’s website is almost like a search engine with how much information they give you about any security you search for
  • There are no trading commissions! 
  • Their site gives you buy/sell ratings 

Disadvantages:

  • This is a new company, which makes some investors skeptical 
  • There are not as many securities available for WeBull, or markets 
  • You can online invest only on the US market 

What Are Fractional Shares?

If you’re wondering, what fractional shares are, we don’t blame you. This is a relatively new concept to the world of investing/trading. 

A fractional share is when you own less than one full share of any given company. Fractional shares are popular when the single price per share is expensive on any given company.

For example, owning a share of Amazon or Chipotle can be tough to do if you do not have thousands of dollars to invest with. If you’re just starting out, or working with less capital, owning fractional shares gives you access to these highly priced shares, without having to commit all of your money.

How Does Investing in Fractional Shares Work?

To better understand how fractional shares work, lets visit a real life example. A single share of Amazon is currently trading for roughly $3,200.

If you were to own a fractional share of Amazon, say 50% of a single share, you’d have to invest $1,600. If you wanted to own 1/10th of a single share, you’d have to invest roughly $320. 

As the stock price increases or decreases, what you own will also rise or fall in value proportionally. 

What to Consider When Choosing a Brokerage

If you’re interested in investing, there are a few things you must consider when choosing which brokerage you’ll partner with. 

A Wide Range of Securities Offered 

First and foremost, you’ll want to make sure the brokerage you’re working with offers a wide range of securities. For example, can you purchase ETF, stocks, mutual funds, foreigh exchange and options all within the brokerage? If not, you may find that a bit limiting as you expand your investing knowledge and desires. 

Fees & Commission 

Paying fees and commissions can quickly erode your profit! There are plenty of low cost, or even commission free brokerages you can choose from that will keep more money in your pocket. Do not overpay for unnecessary fees! 

Reputation / Reliability 

You also want to make sure the brokerage is reputable, reliable, and secure. Ultimately, your brokerage is a place where you’ll store your hard earned money. You want to make sure they offer security insurance if the account is hacked, and that they have a strong reputation of protecting their clients. 

Customer Support

Following the reputation bullet above, partnering with a brokerage with a strong customer supprot team can make all the difference in the world. Consider the customer support’s operating hours, weekend hours, and live chat features. You never know when you may need to reach someone, and when you do, you want to make sure there is a human on the other end that can troubleshoot any issue you’re currently dealing with. 

Get Involved Early

It’s no secret, investing in the stock market is a great wealth building tool. When’s the best time to get involved in investing? As early as possible.

It doesn’t matter if you have a mountain of cash, or if you’re just starting out, putting your money to work for you will eventually help you reach your financial goals. Understandably, finding the right investments that fit your goals and risk tolerance is challenging to do.

That’s where a financial advisor can help you. Financial advisors exist to help you make sense of the complicated world of investing. You may be only able to purchase fractional shares today, but as you continue to make smart investments and save/invest your money, those fractional shares will quickly add up. You’ll want to make sure you’re factoring everything into the financial equation, and that is exactly where a professional financial advisor can help you! 

Frequently Asked Questions

Can You Make a Lot of Money From Fractional Shares? 

Investing in the stock market can certainly help you make a lot of money. That possibility is always there with fractional shares, although, its not nearly as common. The goal of fractional shares is to eventually have enough money to purchase full shares for a given stock. 

Is There a Downside to Owning Fractional Shares?

Owning fractional shares in and of itself does not necessarily provide a downside, unless of course the brokerage charges fees for such ownership. If so, you’ll want to make sure you do not go on a buying frenzy, and pay an exorbitant amount of money in fees for the fractional shares you purchased. 

What Are the Benefits of Investing in Fractional Shares?

Investing in fractional shares has many benefits! One of the main benefits is the fact that you can own a smaller piece of a highly desirable company, which may provide more appreciation than owning a full piece of a smaller company, that may not grow as quickly.

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