Want to get your kids and/or grandkids interested in investing or tip-toe into the stock market yourself? Buy a slice…a slice of stock. You can trade “fractional” shares of stocks and, in some cases, exchange-traded funds (ETFs) at more than a half-dozen brokerages including Charles Schwab, Fidelity and Robinhood. Fractional shares can be useful because many popular stocks are pricier than what you want to spend as a gift or what investors with limited assets can afford. A single share of Amazon.com recently cost $3,451…Google parent Alphabet $1,634…Netflix $530…Tesla $498…McDonald’s $214…Disney $132.
How it works: Fractional shares can be bought and sold online without commission in taxable accounts and IRAs and even workplace retirement plans if your employer’s plan has a brokerage option. You can choose from several hundred or even several thousand stocks, depending on which brokerage you use, and can invest as little as a few dollars—for instance, $5 at Schwab or $1 at Fidelity and Robinhood. Dividends are passed on to you in proportion to your fractional stake.
Best brokerages for fractional shares now…
If you want lots of investment choices: Fidelity offers fractional shares in more than 7,000 stocks and ETFs, including all those on the New York Stock Exchange and Nasdaq, compared with only stocks in the S&P 500 at Schwab and most stocks that have a market value of at least $25 million at Robinhood.
If you want to give gifts to minors: At Fidelity and Schwab, you can open a custodial account for a child. At Schwab, you can print a Schwab Stock Slices certificate to give to the child.
If you want to make recurring purchases automatically: Robinhood lets you buy fractional stock and ETF shares on a monthly basis or other schedule.