Fractional Shares

A fractional share is exactly what it sounds like: a fraction of a full share. Instead of needing to buy a whole share of a stock or ETF, you can buy a portion of one. If a stock trades at $200 and you only have $50 to invest, you can buy 0.25 of a share.

Why it matters

Fractional shares remove one of the oldest barriers to getting started. Some stocks trade at hundreds or even thousands of dollars per share. Without fractional shares, you’d need to save up enough to afford a full share before you could invest. That’s a real obstacle for anyone starting with a small amount.

With fractional shares, you can invest whatever amount you have, whether that’s $10 or $10,000. This also makes it easier to set up regular automatic investments. Instead of calculating how many whole shares you can afford each month, you just pick a dollar amount and invest it.

How it works in Canada

Not every Canadian brokerage supports fractional shares. Wealthsimple Trade is one of the more well-known platforms that does. Some brokerages only offer fractional shares for certain types of orders or certain securities, so it’s worth checking the details before you assume it’s available.

One thing to keep in mind: fractional shares can’t always be transferred between brokerages. If you move your account, you may need to sell your fractional positions and rebuy them on the new platform. It’s a small inconvenience, but worth knowing upfront.

A concrete example

Say you want to invest in a stock trading at $180 per share, but you only have $50 to put in this month. With fractional shares, you’d buy 0.278 of a share. If the stock goes up 10% to $198, your 0.278 share is now worth $55. You get the same percentage return as someone who bought a full share.