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Buying a popular stock might sound appealing if the business is doing well, but it can also be quite expensive. Meta, for example, traded above $660 per share in spring of 2026, while Costco was nearing $1,000 and AutoZone topped $3,500. That's a lot of money to spend for one share, especially if you're trying to maintain a diversified portfolio. Meaning, some investors could feel left out.
That's why fractional shares exist. They're a piece of a share of stock or ETF that is listed on major exchanges. If you choose to invest in fractional shares, you can do so on Schwab.com, Schwab Mobile, and the thinkorswim® trading platform.
The minimum investment for a fractional share is $1 at Schwab, and just like the stock, the value of your fractional share proportionally changes as the price of the stock rises or falls. For example, if a share of company ZYX costs $100 and increases to $110, a $20 fractional investment would also grow by 10% to $22.
Fractional shares are also eligible to receive dividend payments, which are proportionate to the size of the fractional share. For example, say a share of company ZYX is worth $200 and pays a dividend of $5. A fractional share worth $40 would earn a $1 dividend.
And dividends can be automatically reinvested and used to buy more of the stock or ETF—even fractions of a share. That means you may already own some fractional shares if you've elected to reinvest dividends on any eligible stock or ETF position and the funds have been used to purchase a piece of a share.
Fractional shares can also make it easier to build a diversified portfolio. With a set amount, let's say $100, you can spread your investment across a variety of stocks and ETFs—something that may be more difficult to achieve if you're buying whole shares.
There are a few ways to buy fractional shares.
Share-based orders let you enter the decimal representing the percentage of a share you want to purchase.
For example, let's say you want one-fifth of a $500 stock. You'd enter .2 in the order form and your investment would cost $100. But remember, stock prices can change quickly. If the stock price were to rise to $505 per share at the time your order gets filled, the .2 shares would then cost $101.
With a dollar-based approach, you can enter the dollar amount you're comfortable spending and the platform will calculate the size of the fractional share. For example, if a stock is trading at $500 and you decide to invest $75, you'd get 15% of a share.
Fractional shares have some limitations compared to full shares.
As a fractional share owner, you may not be entitled to certain voting rights and some bankruptcy protections. You'd retain those rights if you own any whole shares.
Any orders for less than one share must be placed as market orders, which means you buy or sell at the best next available price. They're limited to day orders only, which means the order expires if the trade goes unfilled at the end of the session.
Orders for larger than one share, including fractions, can be market or limit orders. The timing can be day or good till canceled.
As always, if you liquidate an entire position, it must be a share-based transaction. Schwab does not offer dollar-based orders for closing positions.
Another consideration is that you can only trade fractional shares during normal stock market hours, 9:30 a.m. to 4 p.m. ET. You can place orders at any time, but they won't be eligible for execution until the market opens, which means prices could change between the time you submit your order and when it's filled.
While fractional shares can make investing more accessible, it's important to be aware of the risks and limitations. Just like owning whole shares, fractional shares carry the possibility of losing your entire investment. Additionally, putting too much of your portfolio into a single company—even through fractional shares—can expose you to unnecessary risk. It's wise to diversify and avoid concentrating your investments in one company or industry, for example. Remember, nothing is guaranteed when investing in the stock market, so always invest carefully and consider your big-picture goals.
For more help on planning your financial future, check out the Charles Schwab YouTube channel and visit schwab.com/learn.
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