What Are Fractional Shares?

By Matthew Frankel, CFP – Updated Feb 24, 2025 at 3:51 PM

Key Points

Fractional shares let you invest any amount, removing share price barriers.
Fractional shares allow full investment of funds, avoiding unused cash in accounts.
They enable buying high-value stocks with minimal capital, increasing portfolio diversity.

When investing in the stock market, it can be difficult for investors to put all of their money to work or to invest in all of the stocks they want if they are only able to buy entire shares of stock. With many popular stocks trading for $500, $1,000, or more, some newer investors could struggle to afford a single share.

Fractional share investing has gained serious momentum in recent years and has solved some major pain points. Here's a rundown of what fractional shares are, why they're important, and how they work in the real world.

How investing in Fractional Shares works — Image source: The Motley Fool

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Real-world example of fractional share investing

Let's say that I deposit $1,000 into my brokerage account and want to split it evenly among shares of Apple (AAPL +1.25%), Berkshire Hathaway, Amazon (AMZN +1.43%), and Tesla (TSLA -3.36%) to start my stock portfolio. We'll assume that the share prices of each of these companies, rounded to the nearest dollar, are:

Apple: $220
Berkshire Hathaway: $478
Amazon.com: $173
Tesla: $219

If I had a brokerage account that did not allow fractional share investing and I had $250 to invest into each, I would end up with one share each of Apple, Amazon, and Tesla, and I would have $388 in uninvested cash left in my brokerage account.

On the other hand, if my broker offered fractional shares, I could put all $1,000 of my money to work with 1.13 shares of Apple, 0.52 shares of Berkshire, 1.44 shares of Amazon, and 1.14 shares of Tesla. Not only would I be able to invest 100% of my money, but I'd have equal-sized positions in all four companies.

About the Author

Matt Frankel, CFP, is a contributing Motley Fool stock market analyst and personal finance expert covering financial stocks, REITs, SPACs, and personal finance. Prior to The Motley Fool, Matt taught high school and college mathematics. He holds a bachelor’s degree in physics from the University of South Carolina, a master’s degree in mathematics from Nova Southeastern University, and a graduate certificate in financial planning from Florida State University. He won a SABEW award for coverage of the 2017 Tax Cuts and Jobs Act. He is also regularly interviewed by Cheddar, The National Desk, and other TV networks and publications for his financial, stock market, and investing expertise.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Matt Frankel has positions in Amazon, Berkshire Hathaway, MercadoLibre, and Walt Disney. The Motley Fool has positions in and recommends Amazon, Apple, Berkshire Hathaway, MercadoLibre, Tesla, and Walt Disney. The Motley Fool has a disclosure policy.