There’s a new way to purchase shares that makes the stock price almost meaningless. Brokerage firms like SoFi Invest, Cash App, and Robinhood offer fractional shares, which let investors own any of America’s leading companies in the S&P 500 for as little as $1 each. In June, Charles Schwab introduced Schwab Stock Slices, which is designed to make investing easier and more accessible.
What are fractional shares?
Fractional shares are pieces of whole shares of a company. Fractional share trading is a form of investment that could help investors access the stock market at a lower cost. You can buy or sell fractional shares based on dollar amounts or share amounts. For example, you can purchase $100 or 0.5 shares in Netflix. Fractional shares are also created in several ways like stock splits, dividend reinvestment plans, and mergers and acquisitions.
Charles Schwab’s investment products
In June, Charles Schwab introduced its new fractional investing feature called Schwab Stock Slices. Investors can buy or sell fractional shares of any S&P 500 company for as little as $5 each. Investors can use the new feature to buy a single stock slice or up to 10 different stock slices in a single order.
After you have selected the single stock or a collection of stocks that you want to buy, the total dollar amount to be invested is split evenly across each stock regardless of their share prices. As a result, Schwab Stock Slices are a simple and low-cost way to invest in the stock market.
For example, if you had $50 to invest and wanted to buy Facebook and Amazon, you could buy $25 worth of shares for each company, irrespective of their share price, commission-free. In the past, to purchase a single stock, you were required to at least cover the stock price of one share, which could cost hundreds or thousands of dollars per share.
Charles Schwab offers a wide selection of investment products including:
- mutual funds - over 16,000 mutual funds available, more than 4,000 are no-load, no transaction fee
- ETFs - pay $0 commission on more than 2,000 ETFs across a range of asset classes and fund companies
- stocks - pay $0 online commission, enjoy fast trading and execution, and get help evaluating stock opportunities
- bonds - get a wide selection and specialized help at a low price
- International stocks - trade stocks from more than 35 countries and access over 60 international stock exchanges
- fractional share trading of stocks in the S&P 500 for as little as $5
- access to additional markets like futures and commodities at any time of day during the trading week
- simple and multi-leg options
- OTCBB and penny stocks
How to buy Schwab Stock Slices
You can buy Schwab Stock Slices through the company’s brokerage accounts and custodial accounts.
Here are four steps to help you buy Schwab Stock Slices in a custodial account:
- open a custodial account
- fund a custodial account
- buy Stock Slices
- print a stock announcement
Here are three steps to help you buy Schwab Stock Slices for yourself in a brokerage account:
- open a brokerage account
- fund your account
- buy your fractional shares
Which are the best stocks to buy fractional shares?
The stocks that cost hundreds or thousands of dollars per share are the best stocks to buy fractional shares. For example, Google parent company Alphabet, Amazon, and Booking Holdings cost more than $1,000 per share.