Brokerages That Are Considered to Be the Best for Investing in Fractional Shares in 2023

Brokerages That Are Considered to Be the Best for Investing in Fractional Shares in 2023

The Best Brokers to Use When Purchasing ETFs and Fractional Shares From

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The phrase “fractional shares” refers to any amount of ownership that is less than a complete share. A brokerage that deals in fractional shares will let you acquire 0.05 shares, which is equal to 5 percent of a single share, even if the stock you wish to purchase is priced at $200 per share and you only have $10 to put into it. Although not all brokerages provide them, fractional shares are becoming more and more common among big brokerages that provide online trading.

The top brokerages for investing in fractional shares will allow you access to every stock and exchange-traded fund (ETF) that is listed on a major stock exchange in the United States. It is essential that you have a thorough understanding of the fees, charges, and any account features that may be significant to you, such as a platform for active trading or choices for making investments on a recurrent basis.

This article will provide you with a more in-depth look at the top fractional share investing brokerages so that you can make an informed decision that is suitable for your investment requirements.

Brokerages That Are Considered to Be the Best for Investing in Fractional Shares in 2023

  • Best Overall: Charles Schwab
  • Best for Beginners: Fidelity Investments
  • Betterment is the best platform for automated investing.
  • InteractiveBrokers is the best option for active traders.
  • best overall
  • Schwab, Charles

Best Overall: Charles Schwab

Due to Charles Schwab’s support for a wide variety of well-known fractional share investments and the availability of an account that does not incur any additional fees or expenses, we deemed the company to be the best overall option. There are no recurring monthly fees or trading charges for stocks and ETFs associated with the majority of self-managed accounts offered by Schwab.

The Schwab Stock Slices program is a fractional share program that allows investors to purchase shares of equities for as little as $5. The service supports all 500 stocks that are included in the S&P 500 index. You may purchase any of these stocks by going to the Stock Slices area of the website or mobile app and making your purchase there. You are permitted to purchase a maximum of thirty stocks in a single deal. You are able to offer stock slices as presents if you have custodial accounts.

Pros

  • There are no ongoing account fees or charges on trades.
  • All 500 S&P 500 stocks are supported.
  • You can purchase up to 30 stocks at one time.

Cons

  • There are no ongoing purchases.
  • only supports equities that are listed on the S&P 500.
  • Best for Beginners
  • Investment company Fidelity

Best for Beginners

Investment company Fidelity

  • NO DEPOSIT REQUIRED: There are no ongoing account fees or charges on trades.
  • ACCOUNT TYPES: taxable brokerage, retirement, educational, custodial, and trust.HSA
  • OPEN ACCOUNT

Why Did We Go With It?

The Stocks by the Slice service from Fidelity provides support for more than 7,000 different stocks and exchange-traded funds (ETFs) listed in the United States. There are no ongoing costs associated with the accounts, and there are no commissions charged on stock or ETF trades. Because the functionality of buying fractional shares is integrated into the primary stock trading system, you will utilize the same platform whether you want to acquire a complete share of a stock or only a piece of it.

For a number of different reasons, newcomers are strongly encouraged to consider Fidelity. To begin, you can buy fractional shares for as little as one dollar, making it easy to get started even if you don’t have a lot of money saved up. Fidelity also provides a large number of materials that are available to you at no additional cost in order to help you improve your investment abilities and approach. In addition to this, it provides investment applications that are appropriate for novice investors and are user-friendly.

Pros

  • Invest without being subjected to commissions or ongoing fees.
  • Trade 7,000 stocks and exchange-traded funds with fractional shares starting at $1.

Cons

  • There are no regular purchases required for fractional shares.

BEST FOR AUTOMATED INVESTMENT IMPROVEMENT

  • DEPOSIT MINIMUM: $0
  • Fees: A yearly charge of 0.25 percent
  • Account Types: Taxable brokerage, retirement, trust

LEARN FURTHER The Reasons Why We Picked It

The automatic investment service offered by Betterment is more commonly referred to as a robo-advisor. Investors using Betterment are asked a series of questions, including their age, investment objectives, and level of tolerance for risk. On the basis of your investing profile, you have been placed in an exchange-traded fund (ETF) portfolio that has been expertly crafted.

Betterment employs fractional shares to maintain your portfolio in line with your goal allocation. This is necessary since it is highly likely that the value of your investment balance does not exactly correspond with the value of the ETFs in your portfolio. Although Betterment will build a portfolio for you, using their service will cost you money. A yearly fee of 0.25 percent of your account balance is required to maintain the basic level, which is the best option for the vast majority of customers. However, this may or may not be profitable depending on the level of financial expertise you possess and the objectives you wish to achieve.

Pros

  • Management of investments that are completely automated
  • A personalized investment strategy with ETFs
  • Automatic tax-loss harvesting for accounts that are eligible for it.

Cons

  • There is a yearly charge associated with all accounts.
  • There is no single stock.
  • Reduced influence on your investment portfolio
  • Ideally suited to active traders

InteractiveBrokers NO DEPOSIT WHATSOEVER, and the fees are as follows: 

  • There are no ongoing account fees or charges on trades.
  • TYPES OF ACCOUNTS: brokerage, retirement, custodial, and trust accounts that are subject to taxation.
  • OPEN ACCOUNT

Why Did We Go With It?

There are two distinct sorts of accounts available with Interactive Brokers, each catering to a distinct range of trading and investing needs. IBKR Lite does not charge its users any ongoing fees or trading commissions for their accounts. Interactive Brokers offers great trading tools for aggressive traders, including those that satisfy the requirements of Wall Street professionals.

Users are required to go through a process in order to enable the functionality in their account that pertains to fractional shares. Once activated, you will be able to trade almost any stock or ETF on any exchange in the United States. This includes not just the New York Stock Exchange (NYSE) and the NASDAQ, but also a large number of over-the-counter companies that are listed on pink sheets. If you want to buy a fractional share, the smallest order you may place is for $1 or 0.0001 shares, depending on how you submit your order.

Pros

  • You may trade fractional shares of practically every stock and exchange-traded fund in the United States.
  • You may start investing with as little as one dollar, or 0.0001 share.
  • There are no ongoing account fees or charges on trades.

Cons

  • Trading instruments that require active participation might be intimidating for new investors.
  • More sophisticated pricing structures.

Final Verdict

A brokerage account that allows for the purchase of fractional shares is the ideal choice for you if you are interested in making investments but do not wish to be constrained to purchasing complete shares. There are a number of great choices for investing with no transaction fees, including Schwab, Fidelity, and IBKR Lite. Keep in mind that using Betterment to manage your portfolio will cost you money, despite the fact that it is a solid option. Any of these brokerages might be a suitable fit for you, depending on the stocks you wish to buy and the ways in which you choose to invest your money.

How does one go about investing in fractions of a whole?

When you engage in fractional investing, you are not required to purchase equities in their entirety. You may acquire a fraction of a share, with the smallest increment of equity costing between one dollar and five dollars. For instance, if you want to buy a stock that is going for $1,000 per share but you only have $100 to invest, you can use a fractional investing brokerage account to acquire 10% of a single share.

Compare the Best Fractional Share Investing Brokerages

Company Account Minimum Fees Lowest Investment Amount Fractional Share Offering
Charles Schwab Best Overall $0 No recurring account fees or trade commissions $5 S&P 500 Stocks
Fidelity Investments Best for Beginners  $0 No recurring account fees or trade commissions $1 7,000 stocks and ETFs
Betterment Best for Automated Investing $0 0.25% annual fee N/A Automated ETF investments
InteractiveBrokers Best for Active Traders $0 No recurring account fees or trade commissions $1 Nearly all U.S. stocks and ETFs

How does one go about purchasing fractional shares?

Although the process of purchasing fractional shares differs from one brokerage to the next, there are some standard processes that must be followed. To get started, you will have to register for a brokerage account. After that, in order to contribute funds, you will need to link to a bank account. After you have made a deposit into your account, you will be able to purchase your first fractional share.

You can enter a purchase by going to the trading or fractional share part of the website or mobile app that corresponds to your brokerage account. Simply type in the ticker symbol of the stock you want to purchase as well as the desired dollar amount. Your order will be submitted as soon as you click the “Buy” button. You won’t formally possess a fractional share in the company until you get confirmation that the order has been processed successfully.

How Much Does It Cost to Buy a Fractional Share?

Buying fractional shares may cost as little as one dollar or five dollars, depending on the brokerage, but this does not indicate that the price of the stock is one dollar or five dollars. The current share price determines how many shares of that company’s stock you may purchase for that price.

What are the Advantages of Purchasing Fractional Shares as an Investment?

Investors can have access to equities that they might not otherwise be able to purchase thanks to fractional shares of the company. There are stocks with prices per share that range from the hundreds to thousands of dollars. Even if they have a limited amount of capital, investors are able to access any stock that is supported by using fractional shares.

Methodology

Our readers can count on us to provide them with evaluations and ratings of online brokers that are objective, thorough, and comprehensive. Our reviews are the culmination of several months’ worth of research and analysis into every facet of an online broker’s platform. These aspects include the user experience, the quality of trade executions, the products that are available on the platform, the costs and fees, the level of security, the mobile experience, and customer service. Following the establishment of the criteria, a rating scale was developed, and thousands of data points were gathered in order to be factored into the score system.

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