Best Fractional Investing Apps – Entry to Blue Chip Stock
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I admit I’m a bit of a nerd when it comes to investing apps and investment advice. Friends and family think I spend hours analyzing the stock market and refining my investing strategy. But in reality, I let computers do most of that work. One of the ways I do this is by using micro-investing apps. These apps use fractional share investing in purchasing fractional shares of stocks or a portion of individual stocks that is less than one full share.
Many of the best stocks on the market have a very high share price. For example, a whole share of Amazon’s stock will cost you about $167. Or, if you’re wealthy, one share of Berkshire Hathaway (the most expensive stock on the market) is about $641,435. But fractional investing allows you to purchase a portion of these costly stocks. You can even automate this process to get on with your life.
These mobile apps use low-cost and free investing, a reasonably new phenomenon. Trading fees made it too expensive to make multiple small purchases in the past. But the emergence of commission-free trading has given new investors and those with low-risk tolerance a way to learn about investing without putting up large amounts of money. It also allows people with less capital to build a brokerage account slowly, much like a workplace 401k.
Numerous apps and financial products allow you to do fractional investing, and each comes with its upsides. The following apps are some of the most popular and best.
In this article
Overview of the best fractional investing apps
App | Best For |
Robinhood | Active trading |
Fidelity | All-in-one financial management |
Betterment | Robo-advisor investing |
Charles Schwab | Beginners |
M1 Finance | Long-term passive investing |
SoFi | Diversifying your portfolio through fractional shares |
Webull | Beginner to intermediate active investors |
E*/Trade | Those looking for a retirement account provider with a long track record that can also provide a form of fractional investing |
Acorns | Those looking to make saving simple |
- Commission free stock trading.
- No account minimum.
- Trade stocks, options, ETFs, and more.
- First stock free.
Best fractional investing apps
Robinhood
Robinhood is one of the best-known options for fractional investing. It allows you to buy unbelievably small portions of stock, down to one millionth of certain stocks and ETFs. And it offers an incredible variety of stocks. This app is best for active trading. It offers commission-free trading, a $0 account minimum, dividend reinvestment, crypto trading, and more.
Fidelity
Fidelity refers to fractional investing as “buying stock slices.” It has a wide variety of stocks and ETFs (over 7,000) and can start with as little as $1 in your investment account. Additionally, there are no trading commissions; you can connect everything from bill paying to savings accounts to credit cards. With all those features, Fidelity is a well-designed investing platform that allows you to manage the rest of your financial life in one place.
Betterment
This fractional investing app uses a robo-advisor to keep you moving toward your goal. This can be tailored to your risk tolerance, social or environmental beliefs, age, etc. With Betterment, people can sit back and allow their money to grow into diversified portfolios without constant management.
Charles Schwab
Charles Schwab offers some of the best investment options, allowing you to purchase a fractional share of any stock in the S&P 500 Index. This app is also best for beginners because of its numerous educational resources on stock trading, personal finance, and more.
M1 Finance
M1 Finance focuses on long-term passive investing. This app offers mutual funds, retirement accounts, and automatic portfolio rebalancing. On the downside, it has a $100 minimum balance ($500 on retirement accounts). But it does provide dividend reinvestment, numerous portfolios with no account fees, and even a debit card that earns cash back on purchases.
Read a full review on M1 Finance.
SoFi
SoFi is suitable for both beginner and long-term investors. It offers a $0 account minimum, stocks and ETFs, fractional shares, retirement accounts, cryptocurrency, IPO investing, and automated investing. With no annual fee, this app is a strong option for creating a diversified portfolio through fractional investing. One more plus: sign up and receive a free stock worth up to $1,000.
Webull
With a well-designed mobile app with helpful educational research and real-time data, Webull is best for day trading. It helps an investor make purchases with speed and accuracy. Features include commission-free stocks, ETFs and options, $0 account minimum, fractional shares, and retirement accounts. It is best for beginner to intermediate active investors. Webull even offers a signup promotion that gives you up to 12 free fractional stocks.
E*Trade
E*Trade doesn’t allow you to make fractional stock purchases, but it does allow you to reinvest your dividends into fractional shares. The minimum balance for these purchases is $5; you can purchase as many as 30 at a time. And this all comes with no trade commissions. It’s a long-time contender in investing, and its retirement accounts are widely popular, so it should not be overlooked. If you are looking for a solid retirement account provider offering fractional investing, E*TRADE may be best for you.
Acorns
The coolest feature of this app is its ability to round up on purchases and invest that difference into your choice of ETF portfolio. Simply link your debit or credit card, and Acorns will do all the work of ETF trades for you. This comes with a $3 monthly fee ($12 for families), giving you an IRA, a debit card, a targeted retirement account, and more. This app is best for turning their spending habits into savings.
Read a full review on Acorns.
- In under 3 minutes, start investing spare change, saving for retirement, earning more, spending smarter, and more.
- Make your first successful Recurring Investment (min $5) - get your $20 bonus within 10 days of following month
- Over 13M All-Time Customers
- Over $22B Invested
Best fractional investing apps summary table
App | Account minimum | Trading commission | Investments | Taxable/Retirement | Automated Investing |
Robinhood | $0 | $0 | Stocks and ETFs on NYSE and NASDAQ, options, crypto | Taxable | Yes |
Fidelity | $0 | $0 | Stocks, bonds, mutual funds, ETFs, options, crypto | Both | Yes |
Betterment | $0 | $0 | Taxable accounts, IRAs, trusts | Both | Yes |
Charles Schwab | $0 | $0 | Stocks, bonds, securities, ETFs, options, futures, crypto | Both | Yes |
M1 Finance | $100 ($500 for retirement accounts) | $0 | Stocks and ETFs on NYSE, NASDAQ, and BATS | Both | Yes |
SoFi | $0 | $0 | Stocks, ETFs, crypto, IPOs | Both | Yes |
Webull | $0 | $0 | Stocks, ETFs, options | Both | No |
E*/Trade | $0 | $0 | Stocks, bonds, ETFs, mutual funds, options, futures, crypto | Both | Yes |
Acorns | $0 | $0 | ETFs, IRAs | Both | Yes |
FAQs
What fees am I charged for fractional investing?
This will depend on the investing program you choose, but most charge an assets-under-management (AUM) fee. This is calculated as a percentage of the amount of money being held by the business you chose to use as your investor. A standard amount is less than 1% per year, preferably about 0.25-0.5% per year. Some apps, for example, Acorn, charge a monthly fee. For Acorn, this comes to $3 per month for an individual or $12 per month for a family.
Why buy fractional shares rather than saving up for the whole share?
The advantage to buying fractional shares of a stock is not just the ability to buy an expensive stock. It is also about forming the habit of saving and investing. Automatically investing in your 401k at your workplace creates a pattern of saving. In the same way, fractional investing allows you to invest in chosen stocks and mutual funds automatically. And once that money is set aside in an investment, you will be less likely to change your mind and spend it on something else.
Does fractional investing reduce the risk of investing?
No. Fractional investing, just like any other kind of investing, comes with the risk of losing a portion—or all—of the money invested. This must be considered when purchasing a stock, which is why the educational pieces of certain apps can be a significant benefit.
Why you should use a fractional investing app
I recommend fractional investing apps to my friends for two reasons. First, they are easy. The stock market is a complicated web of numbers and data that overwhelms many people. These apps simplify that information into an app that does most of the work for you.
The second reason I recommend these apps is because they are habit-forming. Even if putting a few cents of every purchase at the grocery store into an investment doesn’t make you rich, it helps you form the habit of saving. That habit will encourage you to do the hard work of saving money for retirement, even when it isn’t convenient. That habit can make you rich.
Related: Best Acorns Alternatives – Other Investing Apps to Help You Grow Your Finances
The bottom line
You don’t need to be an investing nerd to invest wisely; micro-investing apps have clarified this truth. Each app has its benefits, so depending on how you would like to improve your investment journey, you’ll probably find one. Simply take the time to research, decide, and act. The risk has never been lower than it is now. And guess what? Next time you are out with your friends, you may even have some investing advice to offer.
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Writer
A veteran wordsmith and research nerd, Brittany Wren spent a decade working in higher education where she helped people overcome challenges to chart a path forward. These days, she writes about personal finance, careers, parenting and education. Her content has been published by a wide variety of brands including T-Mobile, Intuit, LifeLock, Reliant Fund Administration and CURO Financial Technologies Corp.
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