Fractional Investing: The Best Platforms to Buy Stocks with Small Amounts
Introduction
Investing in the stock market has traditionally been reserved for those with significant capital, as buying even a single share of some top-performing stocks can be expensive. However, fractional investing has revolutionized the way people invest by allowing individuals to buy a portion of a stock rather than a whole share. This has made investing more accessible to beginners, young investors, and those looking to diversify their portfolios without committing large sums of money.
In this article, we will explore the best platforms for fractional investing, key features to consider, and the advantages and disadvantages of this investment approach.
What is Fractional Investing?
Fractional investing enables investors to purchase a portion of a stock or ETF instead of a full share. For example, if a single share of Amazon costs $3,000, an investor can buy a fraction of that share for as little as $10 or $50, depending on the platform’s minimum investment requirement.
This method allows investors to gain exposure to expensive stocks without needing large amounts of capital.
Key Benefits of Fractional Investing
- Lower Entry Barrier – Enables anyone to invest in high-priced stocks with small amounts.
- Portfolio Diversification – Helps investors build a diversified portfolio without spending large sums.
- Reinvestment of Dividends – Many platforms allow for automatic dividend reinvestment, even in fractional shares.
- Greater Flexibility – Investors can buy and sell portions of shares, making stock trading more accessible.
- Risk Management – Allows investors to test different strategies with minimal risk.
Best Fractional Investing Platforms in 2024
Here are the top platforms that offer fractional investing, making it easier for retail investors to access the stock market with small amounts.
1. Robinhood – Best for Commission-Free Investing
Key Features:
- Allows buying fractional shares for as little as $1
- No commissions on stock and ETF trades
- User-friendly mobile app
- Supports crypto and options trading
✅ Pros:
- No trading fees
- Beginner-friendly interface
- Instant deposits available
❌ Cons:
- Limited research tools
- No retirement accounts (IRAs)
2. Charles Schwab – Best for Long-Term Investors
Key Features:
- Offers fractional shares through its Stock Slices™ program
- Invest in S&P 500 companies with as little as $5
- No commission fees
- Access to comprehensive research tools
✅ Pros:
- Excellent customer service
- No minimum deposit requirement
- Strong research and educational resources
❌ Cons:
- Limited to S&P 500 stocks for fractional shares
- Slower trade execution compared to some platforms
3. Fidelity – Best for Retirement & Long-Term Growth
Key Features:
- Fractional investing available for stocks and ETFs
- No commission on trades
- Automatic dividend reinvestment
- Offers retirement accounts and long-term investing options
✅ Pros:
- Strong reputation and reliability
- Excellent retirement and wealth-building options
- Free research tools
❌ Cons:
- Some advanced features may be complex for beginners
- Limited international stock availability
4. M1 Finance – Best for Automated Investing
Key Features:
- Fractional shares available for stocks and ETFs
- Automated investing with customizable portfolios (Pies)
- No commission fees
- Integrated with IRAs and tax-efficient strategies
✅ Pros:
- Perfect for passive investors
- No trading fees
- Automated rebalancing
❌ Cons:
- Limited customer support
- No day trading features
5. Cash App Investing – Best for Beginners
Key Features:
- Invest as little as $1 in fractional shares
- Simple and easy-to-use app interface
- No commission on stock trades
- Direct integration with Cash App payments
✅ Pros:
- Beginner-friendly
- Low minimum investment
- Easy account setup
❌ Cons:
- Limited research tools
- Not ideal for advanced traders
How to Choose the Best Fractional Investing Platform
When selecting a fractional investing platform, consider the following factors:
1. Fees & Commissions
- Look for platforms with zero or low trading fees to maximize returns.
2. Minimum Investment Requirement
- Some platforms allow fractional shares for as little as $1, while others require at least $5 or more.
3. Available Stocks & ETFs
- Check if the platform offers fractional shares for a wide range of stocks and ETFs.
4. Additional Features
- Consider platforms that provide automatic dividend reinvestment, portfolio rebalancing, and tax-efficient investing.
5. User Experience & Support
- A beginner-friendly interface and strong customer support can enhance your investing experience.
Pros and Cons of Fractional Investing
✅ Pros:
- Accessible to investors with small capital
- Enables diversification even with limited funds
- Allows testing of investment strategies
❌ Cons:
- Some platforms have restrictions on available stocks
- Limited liquidity for fractional shares
- May have delays in trade execution
Conclusion
Fractional investing has made stock market participation more inclusive, allowing anyone to invest in high-priced stocks with small amounts. Whether you’re a beginner looking for a simple app like Cash App Investing, a long-term investor using Fidelity, or an automated investing enthusiast with M1 Finance, there are plenty of platforms to choose from.
By understanding your investment goals, researching platform features, and considering fees, you can select the best fractional investing platform to suit your financial needs.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Always conduct your own research before making investment decisions.
