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Owning a piece of a stock instead of a whole share - like buying $10 of Amazon instead of one full share.
Why It Matters
Fractional shares removed one of the biggest barriers to investing. When Amazon costs $180 per share and Berkshire Hathaway costs $600,000, how could beginners get started? Now you can buy $5 or $10 of any stock. This enables perfect dollar-cost averaging ($100/month into exactly the stocks you want) and proper diversification even with small amounts.
Key Points
- Most major brokers now offer fractional shares (Fidelity, Schwab, Robinhood)
- You get proportional dividends on fractional shares
- Some limitations: can't transfer fractional shares between brokers
Related Terms
Common Questions
Owning a piece of a stock instead of a whole share - like buying $10 of Amazon instead of one full share. Fractional shares removed one of the biggest barriers to investing. When Amazon costs $180 per share and Berkshire Hathaway costs $600,000, how could beginners get started? Now you can buy $5 or $10 of any stock.
Fractional shares removed one of the biggest barriers to investing. When Amazon costs $180 per share and Berkshire Hathaway costs $600,000, how could beginners get started? Now you can buy $5 or $10 of any stock. This enables perfect dollar-cost averaging ($100/month into exactly the stocks you want) and proper diversification even with small amounts.
Most major brokers now offer fractional shares (Fidelity, Schwab, Robinhood)
You get proportional dividends on fractional shares
Some limitations: can't transfer fractional shares between brokers