Fractional shares allow you to invest a small amount of money in high-priced stocks. It is an ideal way for beginners to start investing in a diverse portfolio with only a small amount of money, especially since September 2024 you can hld them in an ISA. In this guide, we will explain what fractional shares are, how they work and the pros and cons of using them to invest.
Compare Fractional Share Platforms
| Investment Platform | Fractional Shares | Min Deposit | Customer Reviews | More Info |
|---|---|---|---|---|
 | ✔️ | £1 | (Based on 275 reviews)
| Visit Broker Capital at risk |
 | ✔️ | $10 | (Based on 276 reviews)
| Visit Broker Capital at risk |
 | CFDs | £250 | (Based on 678 reviews)
| Visit Broker Capital at risk |
 | ✔️ | £1 | (Based on 932 reviews)
| Visit Broker Capital at risk |
 | CFDs | £1 | (Based on 136 reviews)
| Visit Broker Capital at risk |
 | ✔️ | £1 | (Based on 510 reviews)
| Visit Broker Capital at risk |
 | ✔️ | £1 | (Based on 1,336 reviews)
| Visit Broker Capital at risk |
❓Methodology: Our experts chose what we think are the best investment accounts for buying fractional shares based on:
- Over 30,000 votes and reviews in the coveted Good Money Guide annual awards
- Our own experiences testing the fractional share accounts with real money
- An in-depth comparison of the features that make them stand out compared to alternative fractional investing platforms
- Our exclusive interviews with the fractional share investment account company CEOs and senior management
eToro – good for fractional shares on global markets
- Markets available: 2,976
- Minimum deposit: $50
- Account types: CFDs & investing in USD
- Equity overnight financing: 6.4% +/- SONIA
- Pricing: Shares 0.15%, FTSE 1.5, GBPUSD 2
51% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money
eToro takes a slightly different approach to its peers and it allows fractional trading in all the instruments it offers to clients. However, the platform is very basic and not for serious investors.
eToro Review
Name: eToro
Description: eToro is a social trading platform that lets their users share new and existing CFD positions and their investment portfolios. eToro was founded in 2007 in Tel Aviv, Isreal and has grown to offer investing and trading on 3,000 global assets (including real cryptocurrencies) to 30 millions users worldwide.
51% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money
Is eToro a good broker?
Yes, eToro does have its flaws for experienced investors, but if you are just getting started eToro is a great introduction to financial markets. eToro is actually a very innovative trading platform offering copy trading, social networking and unleveraged CFDs.
Pros
- Really simple to use
- Social and copy-trading
- Set your own leverage
- Pre-built sector portfolios
Cons
- Can only trade and invest in USD
- No SIPPs or ISA
- No direct market access
-
Pricing
(4.5)
-
Market Access
(5)
-
Online Platform
(4.5)
-
Customer Service
(4.5)
-
Research & Analysis
(4.5)
Overall
4.6IG – fractional share trading through CFDs and spread betting
- Investments: Shares, ETFs, investment trusts & pre-made portfolios
- Minimum deposit: £250
- Account types: GIA, ISA, SIPP, derivatives
- Account charge: £24 per quarter
- Dealing fee: Shares £3 – £8
Capital at risk
IG does not currently offer fractional share trading and investing services to its clients, but you can trade CFDs and spread bets which give you more control over position size.
IG Expert Review: The original and still one of the best brokers
Name: IG
Description: Founded in 1974 as Investors Gold Index, then IG Index, now just “IG” is one of the world’s largest margin trading brokers. IG offer CFDs, FX and Spread Betting (in the UK) alongside share trading and prime brokerage to over 313,000 active clients and offers 17,000 tradable markets. IG also recently introduced physical share dealing and smart portfolios for longer-term investors.
70% of retail investor accounts lose money when trading CFDs and spread bets with this provider.
Is IG a good trading platform?
Yes, IG provides an excellent all-round trading and investing brokerage service. IG pioneered online trading and financial spread betting for private clients and remains not only one of the largest online trading platforms, but also one of the best. IG stands out through deep liquidity, high market range and excellent added value such as trading tools and analysis.
Pros
- Vast range of markets
- Excellent liquidity & DMA equities
- Listed on the London Stock Exchange
Cons
- Customer service can be slow
- No DMA futures trading
- Still charges inactivity fee
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Pricing
(4.5)
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Market Access
(5)
-
Online Platform
(5)
-
Customer Service
(4)
-
Research & Analysis
(5)
Overall
4.7Interactive Brokers – best fractional share all-round investment platform
- Investments: Shares, ETFs, bonds & funds
- Minimum deposit: £1
- Account types: GIA, ISA, SIPP, derivatives
- Account charge: £0
- Dealing fee: Shares £1 – 0.05%
Capital at risk
Interactive Brokers are one of the biggest online brokers and operate globally. They have offices and operations around the globe including an FCA-regulated business in London. Interactive Brokers offers fractional share trading and investing. The firm claims to offer fractional trading on more securities than any other broker, existing clients can simply enable fractional share trading on their account whilst new customers will need to apply for a share trading account with the firm.
Expert Review
Name: Interactive Brokers
Description: Interactive Brokers is a major US online automated electronic broker company. The financial broker is listed on the Nasdaq Exchange with ticker IBKR. The firm operates in 150 electronic exchanges in 34 countries, and offers trading in 28 currencies. Interactive Brokers has more than 3.19 million institutional and retail customers.
Is Interactive Brokers any good?
Yes, Interactive Brokers is simply unmatched in terms of market access, account types and execution options for retail traders. It always has been and remains one of the cheapest trading and investing platforms globally.
Interactive Brokers is an exceptional trading platform that offers institutional-grade trading capabilities to private clients around the world. IBKR has some of the lowest trading and investing fees and the widest market range in the industry.
Pricing: Top marks as IBKR don’t charge a custody (account) fee and commission are the cheapest around
Market Access: Top marks again for the widest selection of markets available
App & Platform: Hard to beat – excellent range of institutional grade execution tools and simple apps for beginners
Customer Service: IBKR let themselves down a bit here. If you are a big customer you get an account manager, otherwise online support is slow
Research & Analysis: Some of the best education, screeners and market data for free on their website and integrated into IBKR platforms.
Pros
- Very low dealing fees
- Wide market range
- Direct market access
- Complex order types
Cons
- Customer services can be slow
- No financial spread betting
-
Pricing
(5)
-
Market Access
(5)
-
Apps & Platform
(5)
-
Customer Service
(4)
-
Research & Analysis
(5)
Overall
4.8Lightyear – good app for small investors
Lightyear is a new app founded by some of the original Wise employees. Costs are very low and market access is getting better everyday.
Expert Review
Name: Lightyear
Description: Lightyear is a new investment app that offers low cost investing in UK, European and US shares. The company was founded by one of the first Wise (Transferwise) employees, Martin Sokk with a similar objective of making investing as cheap and easy as possible.
Capital at risk.
Is Lightyear good for investing?
Lightyear is a simple and approachable way to invest in stocks and ETFs without unnecessarily large fees. A very well-designed low-cost investing app with discounted FX charges, limit and recurring orders for investing in local and international markets.
Special Offer: Sign up with a promo code GOODMONEYGUIDE deposit at least £50 and get 10 trades for free. T&Cs apply. Capital at risk.
Pros
- Low-cost investing account
- Low FX fees of 0.35%
- International market access
Cons
- No pension account
-
Pricing
(4.5)
-
Market Access
(4)
-
Online Platform
(4.5)
-
Customer Service
(4.5)
-
Research & Analysis
(3.5)
Overall
4.2Revolut – good for part-time investors
Revolut is one of several disruptors in the payments and personal finance space. The company which made its name in payments processing and money transfers has expanded into trading and investing services including fractional share trading in a list of US stocks via its smartphone app, across all of its account categories.
Expert Review
Why we like it
Revolut is a good choice for investors that want to buy and sell major shares and cryptocurrencies. No funds, or smaller cap stocks, but a good entry-level account for most investors.
One of the most commonly asked questions about new banks and fintech is if they are a safe place to keep your money. The answer is generally, yes, if they are regulated by the FCA as funds are protected by the FSCS up to £85,000. But, Revolut, is regulated as an e-money institution and not as a bank so you do not get the FSCS protection.
Revolut says that if they were to go bust, client funds would be paid out of a “safeguarding” account which is a type of ringfenced account where client funds are held. When funds are in this type of account, Revolut cannot (in theory, at least) lend them out or use them to run the business. This is how banks traditionally made money, they pay you a smaller amount of interest than they receive on the money they lend out and make a profit from the difference (among other things).
For small money transfers, Revolut is safe enough, but as with all currency conversions if you are sending over £10,000 abroad you should be using a currency broker. You’ll get much better rates, more control over when you buy and sell, help with all the AML (anti-money laundering) issues that may come up, and the ability to lock in the currency exchange rate for up to a year in advance (if you think it will move against you).
- Sending a small amount of money abroad? Compare the best money transfer apps
Pros
- Easy to use
- Low cost
- Innovative product
Cons
- New company
- Limited Range of investments
- App only
-
Pricing
(5)
-
Market Access
(4.5)
-
Online Platform
(5)
-
Customer Service
(5)
-
Research & Analysis
(4)
Overall
4.7WiseAlpha – good for fractional bonds
WiseAlpha lets you buy fractions of bonds with high minimum trade sizes through their notes.
Expert Review
Name: WiseAlpha
Description: WiseAlpha is an online investment platform that enables UK investors to invest in fractional corporate bonds. Its aim is to make bonds – which traditionally were only accessible to large institutional investors due to high minimum transaction levels (£100k+) – more accessible to private investors.
Is WiseAlpha a good bond broker?
For those looking for more adventurous bond investments, WiseAlpha lets you invest in bonds with high minimum deposits you wouldn’t ordinarily be able to access.
Pros
- Extensive high-yield bond access
- Good educational material
- Open to retail and sophisticated investors
Cons
- OTC product
- No FSCS coverage
- Higher risk than listed bonds
-
Pricing
(4)
-
Market Access
(4)
-
Online Platform
(4)
-
Customer Service
(4)
-
Research & Analysis
(4)
Overall
4What are fractional shares and should you invest in them?
Fractional shares let you invest by choosing an amount of money to allocate to a stock, rather than by the number of shares you want to buy.
Traditionally stocks and shares have been traded in quantities that are whole numbers such as 1, 10 500, or 1000, for example.
That system worked perfectly well for decades but there were a few issues within it. Among them was the fact that retail traders were often excluded from being able to own high-priced stocks such as Amazon (one of the FAANG stocks), a stock that trades at around $131 per share.
If you have a $1,000 portfolio, then at best you could own seven shares in Amazon but of course, that would mean risk concentration or putting all your eggs in one basket.
Are fractional shares worth it?
Yes, fractional share ownership lets you reduce your risk by allowing investors and traders to own less than one share in a company, and therefore spread their money across more stocks.
For example using fractional share trading, as an investor you can buy a tenth of a share in Amazon. You still get exposure to the price performance of the stock but at a fraction of the cost or face value of the security and get a share in the company’s profits through fractional dividends.
It might be easiest to think of the concept of fractional trading as owning shares in a share.
One share of Amazon would cost an investor $131 plus commission, however, one-tenth of a share in Amazon would cost just $13.10 plus commission.
Pros
- Good for small investors: Retail investors to gain exposure to securities that they might otherwise not be able to afford or accommodate within their portfolio.
- Diversification: Fractional share trading and ownership also allow investors to balance their portfolios.
Cons
- Voting at AGMs: If you invest in or trade fractional shares you may be disfranchised from voting rights and corporate actions. Most brokers will try to make good on these items, however, this is likely to be at their discretion
- Non-transferable: Fractional shares cannot be transferred between brokers, as they are a form of CFD not a shareholding in the underlying company. So if you swap your current broker for another one you will almost certainly have to sell any fractional shares you have rather than transferring them to a new home.
- Less protection: We have also yet to see how fractional shareholders would be treated in the event of a default by a broker who offers these services, and where fractional shareholders would rank in the list of creditors in that event.
How to buy fractional shares
You can buy fractional shares through the newer bread for fintech investing apps that cater to smaller investors like eToro,and also more established traditional platforms like Interactive Brokers.
Fractional share ownership and trading are relatively new concepts and as such, they have not been adopted by every broker, notable incumbents like Hargreaves Lansdown, AJ Bell and Interactive Investor do not offer them.
It’s also worth noting that the list of securities that you trade using fractional share ownership, will usually be US-centric, although they are available on UK shares as well.
To trade in fractional shares you will need to open a share trading account with a broker that offers the service.
Can you hold fractional shares in ISAs?
Yes, you can hold fractional shares in a stocks and shares ISA.
HMRC had previously viewed fractional shares as derivatives akin to CFDs, which it considers ineligible for ISAs.
However, the taxman changed their mind in September 2024, ahead of possible legislation from the government, which it thought would allow fractional shares to be held and traded within the ISA structure.
HMRC was quoted as saying that:
“The government has committed to changing the Isa rules to allow certain fractional shares. Taking a pragmatic approach, we will not raise an assessment on managers or investors for fractional shares acquired before these changes are made.”
The previous UK administration had indicated that it would introduce similar legislation. However, the July 4th general election prevented them from doing so.
This was because fractional shares are not fully paid-up equities; rather, they are considered a form of CFD or contract for difference, a derivative of the underlying instrument, rather than physical ownership. Even though normal CFDs are highly speculative products, and fractional shares are not leveraged they do expose the client to the counterparty risk of their broker.
This is particularly relevant as only actual investments (not derivatives) can be held in an ISA.
In Europe, the regulator (ESMA) as we reported earlier this year wants to treat fractional shares as a derivative rather than an investment.
Industry Experts Told Us
“The key takeaway to fractionalised shares is not necessarily that people want to buy less than one share. It’s that they want to invest a fixed sum of money into certain shares, irrespective of the share price. E.g. they want to buy $2000 worth of Tesla.”
Fractional Share FAQs
Yes, fractional shareholders should receive a dividend entitlement pro-rata to their holdings. So if you own a tenth of a share that pays a $1.00 dividend as a fractional shareholder you should receive a tenth of that dividend i.e. 10 cents.
However, the dividend will be apportioned by your broker and not the underlying company and therefore the size of the distribution could vary.
Fractional shares are traded through a broker, but as we noted above they cannot be transferred between brokers. Investors, therefore, have to sell fractional shares through the broker that they purchased them from.
You can buy fractional shares on some of the most popular investments like Vanguard ETFs, Berkshire Hathaway, S&P 500 index trackers
The most popular fractional trading stocks tend to be those that have a high face value and in particular, those that are in tech and growth sectors.
Amazon is the classic fractional trading stock, alongside the likes of Alphabet, the parent company of Google. Other names that are often traded as fractional shares include Tesla, Netflix, Facebook, Microsoft and PayPal.
There are more than 150 stocks in the S&P 500 alone with share prices above $100 per share, pricing that makes it difficult for retail investors to own them, without using fractional trading.
Yes, you can make money with fractional shares in the same way as buying stocks normally. One of the key benefits is that you have a better chance of making money as you can buy a more diverse range of stocks if you are buying fractions of lots of company shares rather than allocating all your money to a single investment.
- Related guide: Is it worth buying a single share of Tesla?
Richard is the founder of the Good Money Guide (formerly Good Broker Guide), one of the original investment comparison sites established in 2015. With a career spanning two decades as a broker, he brings extensive expertise and knowledge to the financial landscape.
Having worked as a broker at Investors Intelligence and a multi-asset derivatives broker at MF Global (Man Financial), Richard has acquired substantial experience in the industry. His career began as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson), following internships on the NYMEX oil trading floor in New York and London IPE in 2001 and 2000.
Richard’s contributions and expertise have been recognized by respected publications such as The Sunday Times, BusinessInsider, Yahoo Finance, BusinessNews.org.uk, Master Investor, Wealth Briefing, iNews, and The FT, among many others.
Under Richard’s leadership, the Good Money Guide has evolved into a valuable destination for comprehensive information and expert guidance, specialising in trading, investment, and currency exchange. His commitment to delivering high-quality insights has solidified the Good Money Guide’s standing as a well-respected resource for both customers and industry colleagues.
You can contact Richard at richard@goodmoneyguide.com
