Why Buy Fractional Shares in a Company?

Reader Letters: What are fractional shares and is it worth buying them? 

Holly Black 3 August, 2021 | 1:04PM
Facebook Twitter LinkedIn



Holly Black: This week's reader asks, "Is it worth buying fractional share in a company?" So, interesting one. Fractional share, as you might have guessed, is when instead of having to buy a whole share in a company, you can buy a portion of it instead. So, you can't do this with all shares, and frankly for a lot of them there wouldn't be an awful lot of point. But the share price of some companies is so high that this is the only way an ordinary investor can access it.

So, take Berkshire Hathaway, for example, the current share price is around $414,000, and I definitely couldn't afford to buy one share in that company. So, the reason you buy a fractional share is to access those more expensive companies, and also it can be really handy for regular investors who want to invest a set amount of money each month into a company. 

Downsides, they are not available for all shares, they are not available through all investment platforms; fractional shares can sometimes be more difficult to sell; you might not have voting rights and owning a fraction of the share means you only get a fraction of the dividend.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

About Author

Holly Black  is Senior Editor, Morningstar.co.uk


© Copyright 2024 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Modern Slavery Statement        Cookie Settings        Disclosures