A fractional share is a part of a whole share of a stock or other investment that allows investors to buy and own a portion of a share, enabling broader accessibility to the market.
Starts at $0 + state fees and only takes 5-10 minutes
Last Updated: February 11, 2026
The business definition of a fractional share represents owning less than a whole share of stock in a corporation. This guide explains what fractional shares are, their benefits, and some important considerations to make when investing in them.
An investor has a fractional share when they own less than one whole share of a stock, EFT, or other security. These shares can result from corporate actions like stock splits, dividend reinvestment plans (DRIPs), capital gains, or dollar-cost averaging. An investor might also acquire a fractional share if they invest in stocks based on a dollar amount.
Most importantly, investors can’t trade fractional shares on the stock market. Only a major brokerage can sell fractional shares, and each has its own fractional share investing process. Fortunately, many of these brokers are online, including Fidelity, Charles Schwab, and Robinhood. It’s also possible to purchase fractional shares through investing applications like SoFi Invest, Cash App Investing, and Stash. Additionally, some robo-advisors like Acorns and Betterment offer fractional shares.
Many investors recognize fractional share advantages. Primarily, fractional shares allow investors to start buying with a smaller amount of money. They can diversify a portfolio by acquiring a broader selection of stocks with their available funds. Finally, fractional shares enable dollar-cost averaging, where investors can regularly purchase a dollar amount of stock. Without fractional shares, investors would have to wait until they can afford a whole share.
The most significant fractional share disadvantages include:
Before purchasing a fractional share, it’s prudent for investors to take time to understand their brokerages’ fractional share policies. Different investors might see different pros and cons depending on their investing needs.
Each broker differs in the types of fractional shares they offer and the investment requirements. While shopping for the right broker, investors might find fractional shares referred to as stock portions, slivers, or slices. Regardless, these terms represent that their owners will own less than a whole share.
When searching for the definition of a fractional share, it might help to have an example. Consider that a company’s stock sells for $1000. If an investor only has $500 to invest that month, they might ask their broker to invest in a fractional share of that company’s stock. That $500 budget could buy half of one share of the company’s stock.
Next, consider that Company A’s stock sells for $900 and Company B’s for $50. An investor with $350 to invest could buy one-third of a share of Company A and one-half of a share in Company B.
When an investor owns less than a whole share of stock, they own a fractional share. As the owner of a fraction of one share, they have limited rights as a shareholder. However, buying these partial shares allows an investor to buy different stocks within their budget.
Recommended articles
ZenBusiness is here for entrepreneurs; it’s their passion to help people start and grow the business of their dreams. They offer several business formation plans that help with setting up a corporation or limited liability company. Or for the more-established business owner, the Worry-Free Compliance Service program can help keep the company on track. In short, ZenBusiness services help entrepreneurs stress less about paperwork and focus on what they love: growing their companies.
Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. For specific questions about any of these topics, seek the counsel of a licensed professional.
Ready to Start Your Business?
Scan to download
the ZenBusiness app
