It used to be that investing in the stock market required thousands of dollars just to open an investment account, and that only got you a couple shares of stock once the account was opened!
Why? Because traditional investment accounts required that you buy shares of stock in whole number share quantities. In other words, you couldn't buy a half of a share of Apple, Amazon or Facebook. You had to buy a minimum of one whole share, and in Amazon's case, that's over $1,000 to invest (as of this writing).
Now, you can buy fractional shares of stock!
Thankfully, modern investing technology has enabled investors to buy fractional shares of stock, enabling anyone with just $5 to invest in expensive companies like Amazon.
Not all investment accounts or investing apps provide this feature. Here we'll show you how to buy fractional shares of stock with trusted investment companies and little to no trade commissions.
Where Can You Buy Fractional Shares?
The fact is there are very few places that allow the actual purchase of fractional shares of stock. Sure, many promote that you can buy them with a robo advisor such as Betterment or Acorns, but in all reality they don't offer fractional shares. They offer a fund comprised of hundreds of shares and allow you to contribute small amounts to these funds.
While robo advisors are fantastic options for passive investing for beginners and experts, their primary purpose and benefit isn't the ability to buy partial stocks with fractional shares.
That leaves us with just a few modern investment companies that allow you to purchase fractional shares of a single company in almost any dollar amount, regardless of how many shares the dollar amount can buy.
M1 Finance
Price: FREE
Min. Balance: $0
Investment Options: With M1 Finance, you can invest in almost any publicly traded company. Investment options within each portfolio are individual stocks or exchange traded funds (ETF's).
Description: M1 Finance lets you create your own investment portfolios comprised of as little as one and as many as 500+ companies. You can start investing with anywhere from as little as just $5. Each investment deposit will be allocated among your chosen companies as a percentage of each portfolio (aka “Pies”).
Stockpile
Price: $0.99 trade commission
Min. Balance: $0
Investment Options: Stockpile allows you to invest in any publicly almost traded company or ETF in any dollar amount.
Product Description: Stockpile is as close to your traditional discount brokerage firm, with the small exception that you can purchase fractional shares in any publicly traded company or ETF. Most discount brokerages charge anywhere between $4.99+ per trade, but Stockpile only charges $0.99 per trade.
Stash Invest
Price: Starts at $1 per month
Min. Balance: $0
Investment Options: Choose among hundreds of individual stocks and ETF's.
Product Description: Stash Invest is a well rounded investing app that provides access to hundreds of stocks and ETF funds that cam be bought in fractional share quantities. Stash can be a great option for beginner investors due to their ease of use, variety of options for investing and educational content. Their premium packages include monthly economic reports. Furthermore, they provide a unique “Stock Back” program that enables users to get cash back in the form of stock at the respective retailers they shop at. So, if you shop at Walmart, you'll get Stock Back in Walmart stock.
You might also like: The Beginners Guide To Investing In Stocks, Bonds, Real Estate & Cryptocurrency
Motif
Price: FREE with options to pay a fee for premium services
Min. Balance: $0
Investment Options: Invest in nearly any stock or ETF fund. You also have options to invest in expert created “Motifs” or create your own Motif to invest in.
Product Description: Motif is a unique investment company that allows you to invest in multiple ways, including fractional shares. A “Motif” is a fund of companies that either you can create yourself or one that's created by the company experts, and serves as a unique customized investment fund. You can invest in other investors personal made motifs as well, and even trade individual stocks.
Folio Investing
Price: Free if at least 4+ trades are made each quarter, otherwise it's $15 per quarter. Other pricing options are available.
Min. Balance: $0
Investment Options: Almost any stock or ETF fund available in fractional shares. Invest in Mutual Funds, over 160+ Folios, or create your own Folio.
Product Description: Folio Investing is a similar investing platform to Motif. They provide access to both already made Folios made up of up to 100 companies and funds, and the ability to create your own Folio of companies and funds. They have over 20 patents on their products, giving them a unique advantage among competing companies.
Why Buy Fractional Shares?
The main reason anyone would want to purchase fractional shares of stock is to eliminate the requirement of what often times might be a large amount of money required to invest up front. With fractional shares, your investment is based on a dollar amount to invest, rather than a number of shares to invest in. This enables investing with any dollar amount, regardless of how many shares it's equal to.
Furthermore, this opens up the window for investors just getting started and with less money to begin, to start making their first trades in their favorite companies, while diversifying among many. Only have $100 to invest? Split that up among 5 or 10 of your favorite companies to get a piece of each, and keep your money diversified.
