The Rise of Fractional Shares: How to Invest Without a Big Budget
One of the biggest barriers to investing is not having enough cash—especially when you’re young and just starting out. I remember feeling this way when I wanted to invest in companies I liked but couldn’t afford a full share.
That’s where fractional shares come in. This concept has been around for a while, but only recently have brokerage firms made it widely accessible.
Key Points:
Fractional shares let you invest in expensive stocks with as little as $1.
You can diversify your portfolio without needing thousands of dollars.
Top brokers like Fidelity, Schwab, and Robinhood offer fractional investing.
Great for beginners and budget-conscious investors looking to build wealth.
What Are Fractional Shares?
As the name suggests, fractional shares allow you to buy a fraction of a stock instead of a whole share.
For example, as of February 14, 2025, Apple stock is trading at $244 per share. If you don’t have $244 to buy a full share, you can invest any amount you want in fractional shares.
Example:
You invest $50 in Apple stock → You now own a fraction of one share.
You invest $25 in Apple and $25 in Amazon → You now own fractional shares of both.
This feature makes investing accessible to everyone, no matter your budget.
Best Brokers for Buying Fractional Shares
Different brokers offer varying options for fractional investing. Here’s a quick comparison:
Charles Schwab: Minimum investment of $5 per stock slice, available for S&P 500 stocks only.
Fidelity: Minimum investment of $1 per stock or ETF, available for any stock listed on the NYSE or Nasdaq.
Robinhood: Minimum investment of $1 per stock or ETF, available for most stocks and ETFs (some exceptions apply).
Please do your own due diligence when choosing a brokerage, consider how many stocks and ETFs they allow you to buy fractionally. Some only support S&P 500 stocks, while others offer a wider selection. Personally, I believe the more options the better.
How and Why Should You Use Fractional Shares?
Fractional shares make investing more accessible, flexible, and diversified.
Why They Matter
Before fractional shares, you had to save enough to buy a full share of expensive stocks.
Now, you can start investing with just $1, even in companies like Amazon and Tesla.
How to Use Them
Start small – Perfect for beginners or those on a budget.
Diversify your portfolio – Buy multiple stocks instead of putting all your money into one company.
Reinvest dividends – Use dividends to buy fractional shares automatically.
Fractional Shares in Action: My Portfolio
I personally use fractional shares to build a well-balanced portfolio. Here’s an example of four stocks I’m buying:
Broadcom ($AVGO) – $232.82 per share
Nvidia ($NVDA) – $138.06 per share
Apple ($AAPL) – $244.09 per share
Amazon ($AMZN) – $228.85 per share
If I were to buy one full share of each, it would cost $843.82. Instead, I can invest $200 and own a fraction of each stock, spreading my risk across multiple companies.
Bonus: Fractional Shares Help with Diversification
I assume that people have probably heard about diversification at least one time. It is easier to say “Don’t put all your eggs into one basket”. Diversification is key to reducing risk. If you invest all your money into one company and they report low earnings, your portfolio could take a huge hit. Fractional shares allow you to spread your investment across multiple companies, lowering your risk while keeping costs low. Spread your eggs across many different baskets.
Final Thoughts: Why Fractional Shares Are a Game Changer
Makes investing accessible for beginners and budget-conscious investors.
Allows diversification without needing thousands of dollars.
Gives you full control over how you invest, down to the dollar.
If you’re just starting out, fractional shares eliminate the biggest barrier to investing—not having enough money. It’s a great way to start small, learn the market, and build long-term wealth.