Glossary

Fractional shares are portions of a whole share in a company or an exchange-traded fund (ETF).

These shares allow investors to own a smaller portion of a single share, making it more accessible for those with limited capital or who want to diversify their investments across multiple assets. 📈💰

For example, if a company's stock price is $1,000 per share, an investor could buy a fractional share worth $100, representing 1/10th of a share. This enables them to invest in high-priced stocks without needing the full amount for a whole share. There are some drawbacks that investors need to be aware of: a fraction of share is not transferrable to another provider, so if you need to move to a different broker you’ll have to sell that portion of your position and repurchase it at your new broker. Also, a fraction of a share is traded directly with the broker’s custodian and in times of market stress this means that fractions of shares are likely to be less easy to trade.

Fun fact: Fractional shares have become more popular in recent years, especially with the rise of digital trading platforms that enable easy access to fractional investing. This trend has helped make investing more inclusive and accessible to a broader audience. 📲