If you’re a small or medium size investor, you’ll want to know if a brokerage offers fractional shares before investing any money with them.
Fractional shares are the great equalizer when it comes to investing. That’s because they enable an investor with a small amount of money to spread their funds among dozens or even hundreds of individual securities with just a few dollars.
What Are Fractional Shares?
Fractional shares are relatively recent innovation. They enable you to purchase a slice of a high-priced stock, rather than requiring you to buy the entire share. For example, you can invest just $1 in a $100 stock. That also means you can invest $1 in each of 100 stocks to build a complete portfolio with just $100.
Fractional shares also extend to exchange traded funds (ETFs). You can make a $1, $0.50 or even $0.10 investment in a single $50 ETF share.
Fractional shares are also why automated investment management accounts can build a diversified portfolio across multiple ETFs with just a few dollars. Most important, fractional shares mean money is no longer a limiting factor when it comes to investing.
Below is our list of what we believe to be the best brokerages offering fractional shares.
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1. Robinhood
This is a trading app designed with Millennial’s in mind.
But Robinhood’s specializations are really short term trading and investing in cryptocurrencies. Since they have no minimum investment requirement, they allow fractional shares in stocks and ETFs. The app is designed for self-directed investors since it offers very limited customer support and not much in the way of investment tools and resources.
Robinhood Basic Features
- Minimum Initial Investment: None.
- Available accounts: Individual taxable investment accounts only.
- Investments offered: Individual stocks, ETFs, options, and American Depositary Receipts (ADRs) for investment in foreign stocks. Also offers investing in cryptocurrencies, including Bitcoin, Ethereum and Dogecoin.
- Fees: No commissions, except on ADRs.
- Customer support: By email only, no phone support.
Robinhood Pros
- No minimum balance requirement to open an account.
- No trading fees, except on ADRs (foreign stocks).
- Offers trading in cryptocurrencies.
- Accommodates day traders.
- Buy shares in $1 increments.
Robinhood Cons
- Not a full-service investment platform.
- No mutual funds or bonds available.
- Limited customer support.
- No retirement plan options.
- No managed portfolio options.
2. M1 Finance
M1 Finance allows you to invest in up to 100 individual stocks and ETFs with just $100.
You can bet that will include a whole bunch of fractional shares. M1 Finance allows you to choose the investments you will hold in your portfolios, which they refer to as pies. You can have as many pies as you want, and after you’ve selected the investments in each, M1 Finance will manage each + style.
It combines the best elements of self-directed investing with automated investment management.
M1 Finance Basic Features
- Minimum Initial Investment: None, but you will need at least $100 to begin investing in a taxable account, and $500 for a retirement account.
- Available accounts: Joint and individual taxable investment accounts; traditional, Roth, rollover and SEP IRAs; trusts.
- Investments offered: ETFs and individual stocks, including fractional shares.
- Fees: None.
- Customer support: Phone, Monday through Friday, 9:00 AM to 5:00 PM, Central time.
M1 Finance Pros
- Create your own portfolios that will then be managed by M1 Finance.
- M1 Finance charges no fees to open or manage your account.
- Choose from pre-built pie templates or create your own.
- Select the stocks and ETFs you want to hold in each pie, giving you self-directed investing access.
M1 Finance Cons
- M1 Finance doesn’t offer mutual funds or bonds.
- You can purchase individual stocks for your pies but you cannot trade stocks on an individual basis.
- Does not offer tax-loss harvesting on taxable accounts.
- Customer support is limited to regular business hours.
- Only 1-2 trading windows per day.
3. SoFi Wealth
SoFi offers automated investment management, while providing an online cash management account (SoFi Money) that offers high interest, no monthly fees, mobile banking, periodic cash back offers and a debit card with access to over 55,000 of ATM machines across the country.
SoFi Wealth provides full robo-advisor portfolio selection and ongoing investment management. And since you will need only $1 to open an account, fractional shares will enable you to buy into ETFs in your account.
One of the most unique features of SoFi Wealth is that it’s a robo-advisor that provides access to live financial advisors.
SoFi Money Basic Features
- Minimum Initial Investment: $1 for SoFi Wealth, but $500 to earn interest on a SoFi Money account.
- Available accounts: Joint and individual taxable investment accounts; traditional, Roth, rollover and SEP IRAs.
- Investments offered: ETFs.
- Fees: The first $10,000 is managed free, then 0.25% on higher balances.
- Customer support: Phone, live chat and phone, Monday through Thursday, 8:00 AM to 8:00 PM, and Fridays, 8:00 AM to 7:00 PM, all times Eastern.
SoFi Money Pros
- Combines automated investment management with high interest cash management.
- You can take advantage of other SoFi services, including borrowing and financial services.
- Access to live financial advisors.
- Management fee is waived if you have a loan through SoFi.
- The company provides career and financial support services.
SoFi Money Cons
- The funds available for investment with SoFi Wealth are limited.
- Does not offer tax-loss harvesting on taxable accounts.
4. Betterment
Fractional shares are what Betterment is all about. After all, how else would you be able to invest in a diversified portfolio with just $10.
Betterment is an excellent choice for new investors, and experienced investors who don’t want to manage their own portfolios. They’ll create a portfolio for you, comprised of ETFs invested in stocks and bonds, and provide full investment management at a very low annual fee. They offer two different investment plans, as well as a high-interest cash account.
Betterment Basic Features
- Minimum Initial Investment: None, but you will need at least $10 to begin investing.
- Available accounts: Joint and individual taxable brokerage accounts; traditional, Roth, rollover, and SEP IRAs; trusts and nonprofits.
- Investments offered: ETFs invested in stocks and bonds.
- Fees: 0.25% per year for the basic Digital plan and 0.40% for the Premium plan (minimum initial investment, $100,000).
- Customer support: Phone and email, Monday through Friday, 9:00 AM to 6:00 PM, Eastern time.
Betterment Pros
- No initial investment required – you can open an account and begin investing as you fund it.
- Low annual advisory fee on the Digital plan – $10,000 can be managed for just $25 per year.
- Unlimited access to certified financial planners with the Premium plan, at a fraction of the cost of traditional, human-guided investment advisors.
- Tax-loss harvesting available on all taxable investment accounts.
Betterment Cons
- Investments are limited to stocks and bonds – there are no alternative investments, like real estate or natural resources.
- Customer services limited to regular business hours.
- No do-it-yourself investing capability.
5. Public
Public is an investment app that champions fractional shares as one of its primary advantages. You’ll need no money to open an account, but at least $5 to begin trading in either stocks or ETFs.
Investing with so little money will require use of fractional shares. There are no trading commissions, which has become an industry standard. But the app also offers a social media network, where you can discuss investment strategies with other participants on the app. As an investment app, Public is available for mobile use only.
Public Basic Features
- Minimum Initial Investment: None.
- Available accounts: Individual taxable investment accounts.
- Investments offered: Stocks and ETFs.
- Fees: No trading fees.
- Customer support: Phone and live chat, Monday through Friday, from 9:00 AM to 5:00 PM, Eastern time.
Public Pros
- No minimum account balance required, you can begin trading with as little as $5.
- Investing social network, where you can connect with other investors to swap investment strategies and information.
- One of the few investing apps that comes with phone contact.
Public Cons
- No retirement account option.
- Investments are limited to stocks and ETFs only; you cannot trade in bonds, options, mutual funds, or other investments.
- No joint accounts.
- No managed account option offered.
Offer valid for U.S. residents 18+ and subject to account approval. See Public.com/disclosures/.
6. Acorns
Acorns is part micro-investing app, and part micro-savings app. That makes it the perfect investment app for someone who wants to begin investing but hasn’t been able to save money to get started.
You save money for investing through a process known as “Round Ups”. You’ll connect your Acorns app to a spending account, and when you run purchases using your credit or debit card, the payments will be rounded up. For example, a charge for $4.25 will be rounded up to $5, with $0.75 transferred into your investment account.
There it will be invested in ETFs using fractional shares, and managed robo-advisor style.
Acorns Basic Features
- Minimum Initial Investment: None.
- Available accounts: Taxable investment accounts, traditional and Roth IRAs and custodial accounts for minors.
- Investments offered: ETFs invested in US and foreign stocks and bonds, as well as real estate investment trusts.
- Fees: Basic investment account, $1 per month; IRA, $3 per month, family plan, $5 per month.
- Customer support: By email, every day from 6:00 AM to 7:00 PM, Pacific time.
Acorns Pros
- The $1 per month fee on taxable investment accounts is a real bargain on accounts of $5,000 or more, when compared to other robo-advisors.
- Enables you to save the money to invest, even if you’ve never been able to save before.
- Offers a free checking account when you open an investment account.
Acorns Cons
- The monthly fee is relatively high on small accounts, particularly those under $1,000.
- An IRA account cannot be opened without first opening a taxable investment account.
- Customer services limited to email only.
7. Stash
Stash works much like Acorns in that it functions as a micro-savings app, helping you to accumulate the money for investment purposes. But rather than using roundups alone to build investment funds, Stash can also work by analyzing your bank account to find extra funds in your cash flow that can be transferred to investments.
And rather than managing your investment account for you, they instead provide investment recommendations which you will carry out on your own. Stash is good for anyone looking to accumulate funds to invest, while also having the ability to participate in self-managed investments.
Stash Basic Features
- Minimum Initial Investment: None.
- Available accounts: Individual taxable investment accounts, traditional and Roth IRAs, and custodial accounts.
- Investments offered: Individual stocks and ETFs.
- Fees: $1 per month for a basic investment account, and $3 per month for a retirement account.
- Customer support: Phone, live chat and email, Monday through Friday, 9:00 AM to 5:00 PM Eastern time.
Stash Pros
- Accumulate funds to invest by either spending roundups or cash flow analysis with automated transfers.
- Provides investment recommendations but allows you to manage your account yourself.
- Multiple customer service communication methods.
Stash Cons
- Makes investment recommendations but doesn’t manage your portfolio.
- The fee of $1 on investment accounts and $3 on retirement accounts will be high on small account balances.
Bottom Line
If you’ve been avoiding investing out of fear that you don’t have enough money, wait no longer. The widespread use of fractional shares means you can begin investing with as little as $5.
You’ve got to start somewhere, so you may as well start small. But once you get started, you can gradually increase your investment and watch your portfolio grow. Fractional shares make it happen.
