WHAT ARE FRACTIONAL SHARES ? YOUR BUDGET-FRIENDLY WAY TO START INVESTING

KidVestors
3 days ago
6 min read

What You'll Learn:

What Are fractional shares ?
How Fractional shares work?
Real-world examples of fractional shares
When do fractional shares become whole shares
How to buy fractional shares ?
Is it worth buying fractional shares ?
Limitations and cons of fractional shares
How to teach your kids and teens about investing

Ever looked at the price of a single share of Amazon or Tesla and thought, “Well, maybe next year?” Don’t worry — you’re not alone. Those price tags can be enough to scare anyone off from investing, especially if you're just getting started. But here’s the good news: you don’t have to buy an entire share to become a shareholder. Thanks to fractional shares, you can start investing with just a few dollars.

Think of it like this — you don’t need to buy the whole pizza to enjoy a slice. Let’s dive into what fractional shares are, how they work, why they’re a game-changer for new investors, and how we teach kids and teens to get in on the action through KidVestors.

What Are Fractional Shares? (Think Slices of Stock Pizza)

Imagine walking into your favorite pizza spot and staring down a giant pie. You want a bite, but you’re not ready (or hungry enough) to eat the whole thing. Instead, you buy a slice or two. That slice still gives you all the deliciousness — just in a smaller portion.

Fractional shares work the same way. Instead of buying a full share of a company’s stock, you can buy a fraction or part of it. If one share of a company costs $1,000, and you only have $100 to invest, you can still own one-tenth of that share.

This is great for beginner investors, especially younger folks and families. You don’t have to wait until you can afford the “whole pizza.” You just start with a slice.

How Fractional Shares Work

Instead of investing based on the number of shares, fractional shares let you invest based on dollar amount. Want to invest $25 in a stock that costs $500? No problem. You’ll own 0.05 of a share. Your fractional share will grow or shrink in value the same way a full share would.

Fractional shareholders also receive dividends (if the company pays them), proportional to the amount they own. So even if you don’t have a full share, you’re still part of the action — collecting returns, watching your investment move with the market, and building your portfolio step by step.

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Real-World Examples of Fractional Shares

Let’s look at a few examples with some of the most well-known companies:

Amazon (AMZN): A full share might cost around $194. If you invest $32, you’ll get 0.16 shares.
Apple (AAPL): With a share price of $180, a $18 investment gets you 0.10 shares.
Tesla (TSLA): One share may cost $300. Put in $90, and you’ll get 0.30 shares.

In all of these cases, you’re still an investor. Your money is in the market, and you have a stake in these businesses , just without needing a huge upfront investment.

When and How Fractional Shares Become Whole Shares

You might be wondering, can fractional shares ever grow into full shares? The answer is yes, but it takes time and additional investment. Here's how:

Let’s say you own 0.25 shares of a company, and you continue buying fractional shares each month. Over time, your portions can add up. Once you accumulate enough to equal one full share (for example, 1.00 share), you officially become a full shareholder of that company. It’s like saving your pizza slices until you’ve got the whole pie.

Most brokerages will automatically consolidate your fractional pieces into a whole share once you hit that 1.00 threshold. Some even allow you to set recurring investments so you can grow your stake consistently.

Where and How to Buy Fractional Shares

You don’t need a financial advisor or a Wall Street hookup to get started. Many online platforms offer fractional shares, and you can start with as little as $1. Here are a few popular options:

Fidelity: Offers "Stocks by the Slice" and allows you to buy fractional shares of most companies in the S&P 500.
Robinhood: Lets you buy fractional shares with no commission fees. Super beginner-friendly.
Charles Schwab: Their "Stock Slices" program allows you to invest in fractional shares starting at $5.
SoFi: Provides access to stocks and ETFs with fractional investing, also with no minimums.

To start, just create an account, connect your bank, deposit money, search for the company or fund you want to invest in, and choose your dollar amount. That’s it.

Is It Worth Buying Fractional Shares?

Absolutely — and here’s why.

Benefits of Fractional Shares:

Lower Barrier to Entry: You can start investing with just a few dollars.
Instant Diversification: Instead of spending $100 on one share, you can spread it across multiple companies.
Flexible Investing: You invest what you can, when you can. No need to wait.
Accessible for Everyone: Whether you're a teen, a parent, or a young adult just starting out, fractional shares make the market approachable.
Educational Tool: Perfect for teaching kids and teens about investing. They can learn how the market works without needing a huge amount of money.

Fractional shares let you start small while building confidence and momentum. For many, that first $5 investment turns into a lifetime of smart money moves.

Limitations and Cons of Fractional Shares

Like anything, fractional shares have a few trade-offs. Here’s what to watch out for:

Transfer Restrictions: If you switch brokerages, you may not be able to move your fractional shares. You might have to sell them first.
Limited Access to Certain Investments: Not all companies or ETFs are available as fractional shares on every platform.
Less Control Over Voting Rights: Depending on the platform, owning fractional shares may not entitle you to vote at shareholder meetings.
Minimal Dividends: If you only own a small piece of a dividend-paying stock, the actual payout can be very small — like a few cents.
Not Ideal for Short-Term Flipping: Fractional shares are best used for long-term investing, not for those trying to make a quick buck.

These are minor concerns for most beginners, especially if your goal is to learn and grow your investments slowly. But it’s still good to know what you’re signing up for.

How KidVestors Teaches Kids and Teens About Fractional Shares

At KidVestors, we’re all about making financial literacy fun, simple, and accessible. We believe every kid and teen deserves to understand how money works, especially investing.

We introduce concepts like:

Fractional shares (hello, pizza analogy!)
Stocks and what they actually represent
Index funds (like investing in a team instead of one player)
ETFs, which offer diversification in a single click
Compound interest, which we call the “magic money multiplier”

Through interactive lessons, animated videos, quizzes, and real-life simulations, our students can learn how investing works in a way that’s actually fun. They earn KV Bucks™ for completing challenges and financial milestones. These can later be used to simulate investing in stocks — including fractional shares — or even help fund real investment accounts with parental supervision.

Whether they’re 8 or 18, KidVestors helps young learners connect the dots between earning, saving, investing, and growing wealth over time. We don’t just tell them what to do. We show them how and why it works.

Fractional Shares Are a Small Start with Big Potential

You don’t need thousands of dollars or a finance degree to become an investor. You don’t even need to own a full share. Fractional shares have made it possible for anyone — even kids and teens — to own a piece of companies they know and love.

It’s a smart, approachable way to start investing. You can test the waters, build good habits, and start your wealth-building journey one slice at a time.

Whether you're a parent, a teen, or just someone finally ready to stop sitting on the sidelines, fractional shares are one of the easiest ways to get started. And if you want your kids or students to learn these lessons early — with the tools and guidance they need — KidVestors has your back.

So go ahead. Take that first step. Because investing isn't about having a ton of money — it's about getting started.

Ready to help your kids take their first step toward investing? Visit KidVestors.co to learn how we make financial education fun, easy, and rewarding for kids and teens.