The majority of Americans own stock, and the number is steadily increasing as robo-advisors and commission-free trading have improved market access and decreased expenses for average investors. However, not all brokers offer the ability to purchase and sell fractional shares, thus we have compiled a list of the finest stock brokers that offer fractional stocks in this blog.

Furthermore, recent advancements in investment technology have enhanced accessibility, as evidenced by the expanding number of online stock brokers and investing applications that allow investors to purchase and sell fractional equities, or small chunks of stocks or Premarket Stock Trading.

What Is Fractional Stock Investing?

Purchasing fractional stocks allows low-asset investors to diversify their portfolios and benefit from dollar-cost averaging, which is the process of making several stock purchases over time to level out price volatility.

Both of these phrases can boost profits and minimize risk over time, as certain shares in the most sought-after global share market trade for more than $100 per share, if not more, and so the fractional share is important.

There are numerous brokerages that offer fractional stock investment; the only thing you have to do is determine which one is best for you including the best stocks for swing trading.

Best Brokerages for Fractional Stocks

Some of the top online stock brokerages offer both fractional share trading and standard full-share trading with no monthly fees, allowing you to trade stocks, mutual funds, and other market-traded instruments.

1. Robinhood Brokerage

Robinhood was one of the first online brokerages to offer commission-free trading, and now that the company’s invention has spread throughout the investment world, it is focusing on fractional shares of stock.

Although you can only join the waitlist for now, there is no fee or commitment to participate until fractional stock trading is available. Meanwhile, you may take use of other Robinhood brokerage services such as a high-yield cash management account and access to alternative assets such as cryptocurrency and precious metals.

Although Robinhood offers commission-free cash trading, several transaction types and account activity may result in charges for novice traders. Robinhood Brokerage is currently offering a free stock valued $2.50 to $150 per share with the establishment of a new account and requires no minimum investment.

2. Stash Brokerage

Stash is a micro-investment platform based on the notion of fractional stock investing. The most notable difference between Stash and its competitors is its self-directed strategy, which provides investors complete control over the makeup of their portfolio.

Furthermore, with Stash, you can invest as little as $0.01 in individual stocks, ETFs, and bonds, and you can eliminate fund charges entirely if your portfolio consists solely of equities and bonds.

However, all Stash plans include a taxable investing account and a checking account with two great features: fractional stock rewards on all eligible transactions and an accelerated payday feature, which allows you to receive your paycheck up to two days early each pay period if your employer qualifies.

Furthermore, Stash’s Auto-Stash feature is available at all price points and includes three features that encourage regular investing: recurring investment settings, a round-up the change feature that rounds every checking debit card purchase to the nearest dollar and invests the difference, and a smart investing tool that moves excess funds from your checking account to your investing account.

3. Webull Brokerage

Webull is yet another renowned online brokerage that does not charge stock trading commissions or management fees. It is also one of the best locations to buy and sell fractional equities of high-valued stocks and ETFs.

Webull allows you to buy fractional shares for as little as $5, making it easy to hold little pieces of stocks with higher share values. You can also buy options and cryptocurrencies here to diversify your portfolio without opening a new brokerage account.

4. Public Brokerage

The Public is a social investing platform that focuses on fractional stocks. You can invest directly in fractional stocks valued as low as $5 per piece, independent of the price of the underlying shares.

The Public brokerage encourages socially responsible investment, which is an important selling feature for younger investors, and if you don’t want to invest in individual companies, the brokerage offers a variety of low-cost index funds with no costs. And, once your Public brokerage account is up and running, you may utilize Public’s social messaging service to communicate with other investors and discuss your assets.

5. M1 Finance Brokerage

M1 Finance is a free digital money management app that includes a free checking account, a low-cost corroding solution, and an automatic investing platform. M1 Finance’s investing solution, M1 Invest, provides constantly rebalanced and fully customized portfolios with built-in fractional share investing.

M1 Borrow, a portfolio lending instrument that offers very low-cost credit backed by the value of the account holder’s investment portfolio, is M1 Finance’s main selling advantage in comparison to other digital investing platforms.

Furthermore, if you upgrade to M1 Plus, you will be eligible for M1 Borrow loans with a 2% APR, which is a better value than home equity loans and about similar to the lowest vehicle loan rates available.

6. Betterment Brokerage

Betterment was the first robo-advisor and one of the first online investment platforms to offer fractional stock investing to the general public, and it continues to be a market leader in the managed investing area, specializing on tax-optimized and customer-allocated portfolios for passive investors.

Betterment provides purpose-made portfolios that include low-cost ETFs that track certain indexes, sectors, and asset classes, and fractional share investing is incorporated into its investing methodology, which also includes features such as unlimited portfolio rebalancing and automated dividend reinvestment.

The Betterment app keeps net costs low by waiving transfer and trading fees, leaving just the flat management charge to pay, which is determined as an annualized percentage of assets under management and fund expenses regulated by the app.

7. SoFi Invest Brokerage

SoFi Invest is a low-cost investing program with a vast cache of fractional equities known as Stock Bits that start at $1, and new users can quickly build diversified self-directed portfolios using only Stock Bits.

SoFi stock bits are also used in SoFi Invest’s managed portfolio solution, which includes dynamic rebalancing and dividend reinvestment, both of which are made feasible by fractional stocks.

Furthermore, active investment portfolios do not charge commissions on stock or ETF transactions; hence, SoFi’s managed portfolio solution is commission-free, even though the funds in which SoFi invests charge management fees, which are outside of SoFi’s control.

Takeaway

When an investor is unable to purchase at least one entire share of a high-flying stock or fund, fractional stock investing is a valuable instrument that can help them create and expand a diversified portfolio. Furthermore, fractional share investing eliminates the temptation to pick equities, which is frequently an inappropriate strategy for novices when your investable assets are insufficient to build a balanced portfolio.

FAQs

1.  What Is the Process of Fractional Investing?

You don’t have to acquire stocks in complete shares when you use fractional investing. You can purchase a small portion of a share for as little as $1 to $5 in stock. For example, if you want to buy a $1,000-per-share stock but only have $100 to invest, you can acquire 10% of a single share through a fractional investing brokerage account.

2.  What Are the Prices of Fractional Shares?

Although you can buy fractional shares for as little as $1 or $5 depending on the brokerage, this does not imply that the stock price is $1 or $5. The amount of shares you purchase at that price is determined by the share price.

3.  What Are the Drawbacks of Fractional Shares?

The biggest disadvantage of fractional shares is that there are just a few stocks that accept them. You may not be able to select from as many companies as you would if you purchased full shares. There is also less opportunity for asset liquidity. You will also be unable to participate in shareholder votes, tender offers, and certain rights offerings if you possess less than one entire share of stock. If you change brokers, you will almost certainly have to sell your fractional shares because only full shares can be transferred.