Fractional Shares: What Are They and How to Invest

Fractional shares make investing more accessible by lowering the barrier to entry for high-dollar stocks, every stock really, but not all brokers offer this feature. Here’s what you need to know about investing with fractional shares and which brokers provide this valuable feature.

What are fractional shares?

Fractional shares are slices of whole shares, letting you invest in stocks and exchange-traded funds (ETFs) with a specific dollar amount instead of having to buy in at the stock’s full share price.

Fractional shares can also be created as a result of stock splits, company mergers and dividend reinvestment plans. But not all brokers offer access to fractional share trading – i.e. the ability to actively trade fractions of shares instead of whole shares.

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How fractional shares work

Fractional shares let you buy a portion of a stock, enabling investment in high-priced companies with smaller sums. Here’s the process:

• Select a compatible broker. Choose a platform offering fractional shares, such as SoFi Invest, Robinhood or Webull. Confirm availability, as not all brokers support this feature.
• Set your investment amount. Decide how much to invest — say, $100. The platform calculates the fraction of a share you’ll receive based on the stock’s market price. For example, a $400 stock yields 0.25 shares for $100.
• Broker executes the trade. The brokerage aggregates orders or uses its inventory to purchase whole shares, assigning you the fractional portion. Trades typically settle instantly or within a day.
• Proportional ownership. You gain the same benefits as whole-share owners, scaled to your fraction. If a $200 stock pays a $2 dividend and rises to $220, your 0.5 share earns $1 in dividends and $10 in value.
• Selling fractions. Sell your fractional shares anytime, subject to the platform’s rules. Proceeds reflect the current market value of your fraction.

Where to buy fractional shares

You’ll need to open a brokerage account with a platform that offers fractional share trading. Fractional share trading is available with several self-directed brokerage accounts and robo-advisors.

• SoFi Invest terms and conditions

  INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
  
  Other fees, such as exchange fees, may apply. Please view our fee disclosure to view a full listing of fees.
  
  Investing in alternative investments and/or strategies may not be suitable for all investors and involves unique risks, including the risk of loss. An investor should consider their individual circumstances and any investment information, such as a prospectus, prior to investing. Interval Funds are illiquid instruments, the ability to trade on your timeline may be restricted. Brokerage and Active investing products offered through SoFi Securities LLC, Member FINRA (www.finra.org) /SIPC(www.sipc.org).
  
  There are limitations with fractional shares to consider before investing. During market hours fractional share orders are transmitted immediately in the order received. There may be system delays from receipt of your order until execution and market conditions may adversely impact execution prices. Outside of market hours orders are received on a not held basis and will be aggregated for each security then executed in the morning trade window of the next business day at market open. Share will be delivered at an average price received for executing the securities through a single batched order. Fractional shares may not be transferred to another firm. Fractional shares will be sold when a transfer or closure request is initiated. Please consider that selling securities is a taxable event.
  
  Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire investment Before trading options please review the Characteristics and Risks of Standardized Options
  
  Advisory services are offered by SoFi Wealth LLC, an SEC-registered investment adviser.
  
  Utilizing a margin loan is generally considered more appropriate for experienced investors as there are additional costs and risks associated. It is possible to lose more than your initial investment when using margin. Please see https://www.sofi.com/wealth/assets/documents/brokerage-margin-disclosure-statement.pdf for detailed disclosure information
  
  SoFi Plus members can schedule an unlimited number of appointments with a financial planner during periods in which the SoFi Plus member meets the eligibility criteria set forth in section 10(a) of the SoFi Plus Terms and Conditions. SoFi members who are not members of SoFi Plus can schedule one (1) appointment with a financial planner. The ability to schedule appointments is subject to financial planner availability. SoFi reserves the right to change or terminate this benefit at any time with or without notice. Advisory services are offered by SoFi Wealth LLC, an SEC-registered investment adviser. Information about SoFi Wealth’s advisory operations, services, and fees is set forth in SoFi Wealth’s current Form ADV Part 2 (Brochure), a copy of which is available upon request and at www.adviserinfo.sec.gov.
  
  Probability of Member receiving $1,000 is a probability of 0.026%; If you don’t make a selection in 45 days, you’ll no longer qualify for the promo. Customer must fund their account with a minimum of $50.00 to qualify. Probability percentage is subject to decrease
  
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  0.25% fee is based on your account value. The wrap program fee may cost more or less than purchasing brokerage, custodial, and record keeping services separately.
  
  Terms and conditions apply*. For 401k rollovers, existing SoFi IRA members must complete 401k rollovers via this link For SoFi members without a SoFi IRA, a SoFi IRA must first be opened, and 401k rollover must be completed utilizing Capitalize via this link. SoFi and Capitalize will charge no additional fees to process a 401(k) rollover to a SoFi IRA. SoFi is not liable for any costs incurred from the existing 401k provider for rollover. Please check with your 401k provider for any fees or costs associated with the rollover. For IRA contributions, only deposits made via ACH and cash transfer from SoFi Bank accounts are eligible for the match. Click here for the 1% Match terms and conditions.
  
  SoFi Plus members are eligible for a 1% match on recurring deposits received into a SoFi InvestⓇ account. For complete SoFi Plus eligibility, please see the SoFi Plus terms.
  
  Members can only earn the 1% match for periods in which a recurring deposit is received into a SoFi InvestⓇ account and the member meets the SoFi Plus eligibility criteria. "Recurring deposits" refer to ACH transfers scheduled with a frequency of weekly, every two weeks, or monthly into either an Active SoFi InvestⓇ account or a SoFi Wealth Automated Investing account. Regular deposits set up from a SoFi Checking & Savings account using Autopilot are eligible for the bonus. One-time transfers are excluded from the bonus. If funds are withdrawn and later redeposited manually into the SoFi InvestⓇ account, the manual deposit will not be eligible for the bonus. Offer can be combined with SoFi Invest 1% IRA match.
  
  Funds must remain in the SoFi InvestⓇ account for two years to be eligible for the bonus. If the deposit is removed prior to the end of the two-year Eligibility Period, SoFi, at its discretion may remove the corresponding proportion of the 1% Match from the member’s account. For instance, if $1,000 was deposited receiving a $10 rewards points match and $500 was withdrawn in a subsequent month, SoFi may remove $5 in rewards points from the bonus. SoFi reserves the right to liquidate securities to pay for the removal of the Match bonus. Further, SoFi may bill this to a receiving firm in the event of an account transfer.
  
  Bonus amounts are calculated on the total net recurring inflows (incoming recurring ACH transfers less outgoing transfers) per calendar month. For example, if a member has a recurring Invest deposit of $1,000 on 11/4/2024 and withdraws $500 on 11/15/2024 and makes no other deposits or withdrawals to their SoFi InvestⓇ account for the month, they will earn 500 rewards points, equal to 1% of $500 net monthly inflows. If a member loses SoFi Plus eligibility at any point throughout the month, they will earn the 1% match only on recurring deposits received while they were a SoFi Plus member. All withdrawals in the calendar month (regardless of Plus status) will count against the bonus. For example, if a member has a recurring Invest deposit of $1,000 on 11/4/2024 as a SoFi Plus member, loses SoFi Plus status on 11/10/2024, and has another recurring Invest deposit of $1,000 on 11/12/2024, they would earn $10 in rewards points (1% of the $1,000 that was deposited while they were a SoFi Plus member).
  
  Bonuses will be paid out as rewards points within two weeks of the end of the calendar month. Members must enroll in SoFi Member Rewards to redeem rewards points, but not to be eligible for the bonus. Rewards points are subject to the SoFi Member Rewards terms. Bonus will not be paid out on SoFi InvestⓇ or SoFi Wealth accounts that are closed or pending closure.
  
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  1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser ("SoFi Wealth"). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
  2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA/ SIPC. Clearing and custody of all securities are provided by APEX Clearing Corporation. Individual customer accounts may be subject to the terms applicable to one or more of these platforms. For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
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Pros and cons of fractional share trading

Pros

• Lowers the barrier to entry. Invest in companies of any share price with a specific dollar amount, often as little as $1.
• Makes it easier to diversify your portfolio. Instead of allocating funds to a single high-dollar share, you can purchase fractional shares to spread your funds across multiple stocks.
• Available with most brokers. Most brokers, especially stock trading apps, offer fractional share trading. E*TRADE is an exception, as it does not offer fractional share trading.

Cons

• May not get voting rights. Depending on the broker, voting rights may not be available with fractional shares. You may not get voting rights until you accumulate an entire share.
• Account transfers. It’s often challenging to transfer fractional shares between brokers, so you may need to sell your fractional shares before you can move funds.

Bottom line

Fractional shares break down the barrier to investing by letting you buy slices of stocks and ETFs with just a few dollars. Although not every broker offers them, many popular platforms now do. Just be sure to check minimum amounts, dividend treatment and transfer limitations before you invest.

Written by

Matt Miczulski

Investments editor and market analyst

Matt Miczulski is an investments editor and market analyst at Finder. With over 450 bylines, Matt dissects and reviews brokers and investing platforms to expose perks and pain points, explores investment products and concepts and covers market news, making investing more accessible and helping readers to make informed financial decisions. Before joining Finder in 2021, Matt covered everything from finance news and banking to debt and travel for FinanceBuzz. His expertise and analysis on investing and other financial topics has been featured on Yahoo Finance, CBS, MSN, Best Company and Consolidated Credit, among others. Matt holds a BA in history from William Paterson University. See full bio

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