Picture this. You\u2019re new to buying and selling stocks and you want to invest in Shopify, one of Canada\u2019s largest companies. But you only have a spare $100 to invest, and Shopify stocks are priced at $212 each\u2014so you can\u2019t afford to buy even a single Shopify share.<\/p>
The good news is that you don\u2019t have to wait until you\u2019ve saved enough money to buy one Shopify stock. Instead, you can invest in the company straight away with fractional shares.<\/p>
A fractional share is a portion of one full share in a company.<\/p>
When you buy a share (or stock) in a company, you buy a little slice of that company. A fractional share is a slice of a company pie. The original slice was the \u201cshare\u201d, but if you cut that slice in half, you have two fractional shares instead.<\/p>
Many online brokers in Canada allow you to buy and sell fractional shares. This allows you to invest in a company even if you can\u2019t afford its full share price.<\/p>
But sometimes fractional shares are created unintentionally, like with a dividend reinvestment plan, stock split or merger.<\/p>