How to buy fractional shares on Fidelity
Fidelity offers fractional shares for stocks and ETFs listed on the New York Stock Exchange (NYSE) and Nasdaq exchange. (In case you're wondering, ETFs are basically giant baskets of stocks that trade on a stock exchange as a single investment.)
With Fidelity, you'll pay $0 in commissions for online trades, plus there's no minimum to open an account -- which is why it makes our list of the best brokers for buying fractional shares. You can get started with these four easy steps.
1. Open a Fidelity account
To buy fractional shares or any other type of investment from Fidelity, first you'll need to open an account. To open a Fidelity account on your own, you'll need to be at least 18. You'll also need to provide the following information:
- Social Security number
- Date of birth
- Name and address of your employer
- Bank account information
You could open a regular brokerage account if you want the ability to cash out any time with no penalty. The downside is that brokerage accounts are taxable, meaning you're expected to report your gains to the IRS and pay taxes on them.
If you're investing for the long haul, though, you could open an individual retirement account (IRA). These accounts are tax-advantaged, but you may pay a penalty if you withdraw funds before age 59 1/2.
2. Fund your account
Once you've opened your account, you'll need to deposit funds before you can buy fractional shares. The quickest way to do so is usually via a bank-to-bank wire transfer or an electronic funds transfer (EFT) from a bank account.
Fidelity doesn't have account minimums for its brokerage accounts and IRAs. You can start trading with as little as $1.
3. Choose your stocks or ETFs
Once you've funded your account, you're free to start buying fractional shares. You can do so through the Fidelity Mobile® app or using the desktop version of the platform. Both options have several helpful tools for researching stocks. You can look up charts to see how a company's stock price has performed over time, along with company profiles and analyst ratings.
You don't need to be an expert on a company in order to invest. But like any investment, fractional shares can lose money, so make sure you've thought through where you're putting your hard-earned funds.
4. Place your first order
Once you've decided what fractional shares you want to buy, it's time to place your first order. Whether you're using the app or the website, you'll need to search for the stock or ETF. Once you've found it, click "buy."
There are two ways you can buy fractional shares: You could change the setting in the app from "shares" to "dollars," so that your order is based on how much you want to spend vs. a specified number of shares.
Using our Tesla example, if you wanted to invest $20 and a single share cost $200, you'd enter "$20" and the app would determine you wanted to buy 0.1 share. Or if you decided to double your investment budget to $40, you'd enter "$40" and the app would convert that to 0.2 share. Or you could keep the setting on shares and simply enter that you want the specified fraction, i.e., 0.1 in the Tesla example.
You'll then decide on what order type you want: market order vs. limit order. With a market order, you're telling Fidelity to execute the trade right away. But with a limit order, you're saying that you only want to place the trade if the shares are trading at a price threshold you specify. If you choose a limit order, you'll need to set a maximum share price at which you're willing to buy.
All fractional trades through Fidelity are executed the same day during real-time market hours. Stock market hours are 9:30 a.m. to 4 p.m. Eastern time weekdays, excluding holidays.
How do you sell fractional shares on Fidelity?
The process for selling fractional shares on Fidelity is similar to the buying process. You'll need to click on the ticker symbol of the stock you own using the Fidelity app and then hit "sell" instead of "buy." You'll decide whether you want your sell order to be based on a set dollar amount or share amount, then you'll choose the type of order.
Alternatives to Fidelity for fractional investing
Fidelity's Stocks by the Slice isn't your only option for buying and selling fractional shares. Here are a few alternative options for fractional investing:
- Robinhood: Robinhood offers fractional shares for most stocks with a price of at least $1 per share and a market capitalization of at least $25 million. The minimum investment is $1. Read our full Robinhood review.
- Schwab Stock Slices™: Charles Schwab's Stock Slices™ allows you to buy fractional shares in any S&P 500 company with as little as $5. Read our full Charles Schwab review.
- SoFi Active Investing: SoFi Active Investing lets you buy fractional shares in around 4,000 stocks and ETFs with a minimum investment of $5. Read our full SoFi Active Investing review.
Should you buy fractional shares on Fidelity?
If you're interested in buying fractional shares, Fidelity's Stocks by the Slice is hard to beat. You won't pay commissions, and you'll only need $1 to start trading. It has one of the most robust selections of fractional share investing options, with 7,000 stocks and ETFs available.
Keep in mind, though, that fractional investing still involves risk. If you buy a stock and then sell it after its price has tanked by 30%, you've still recorded a 30% loss -- whether you purchased a fractional share or whole shares.
It's always important to consider the risks before investing -- whether you're investing $5 or $5,000. But fractional investing through Fidelity is a great way for beginning investors to start building a portfolio.
Fact Checked
Ashley Maready
2024 Award Winner
