Fractional Shares Give New Investors Access to Expensive Stocks

When a high-priced stock feels out of reach, fractional trading offers a practical way to own a piece of the company without buying a full share. Instead of waiting until you can afford a whole share, you can purchase a small portion and begin building a position over time.

Fractional trading is particularly useful for young or new investors who may not have large sums to invest initially, says Kalee Boisvert, an investment adviser at Raymond James Ltd. If a stock trades for $300 per share, for example, an investor can buy a fraction of that share and get started on their investing journey now.

Many young people delay investing because they assume they need a large lump sum to begin. Boisvert recalls feeling the same reluctance in her 20s and, in hindsight, recognizing the missed opportunity from delayed compounding growth. Fractional shares remove that psychological barrier and make stock ownership more accessible.

TD Direct Investing becomes the first bank-owned brokerage in Canada to offer fractional trading

Fractional trading has been available for some time on many do-it-yourself trading platforms. Popular apps and online brokers have long allowed investors to buy fractional shares of stocks and exchange-traded funds (ETFs), making market participation easier for people with smaller account balances.

Some platforms allow extremely small fractions of a share—for instance, tiny slices that represent a very small fraction of a whole share. Recently, TD Direct Investing launched its fractional trading service, letting customers buy and sell fractions of stocks and ETFs with minimum trades as low as $5. This marks the first time a major Canadian bank-owned brokerage has provided real-time fractional trades alongside full-share trading.

Cindy Marques, CEO of financial planning company MakeCents, says the rise of simple, low-cost trading apps prompted larger institutions to offer easier access to markets. “They have to compete,” she notes, as DIY platforms have lowered costs and simplified the user experience for many Canadians who prefer managing their own investments without an adviser or branch visit.

What rights do fractional shareholders have?

Owning a fractional share does not eliminate shareholder rights; it simply scales them to the percentage you own. Dividends, for example, are paid in proportion to your ownership. If you own half of a share, you receive half of the dividend per share. Voting rights are similarly prorated to reflect fractional ownership.

When selling fractional shares, the mechanics resemble selling whole shares, but you can specify the dollar amount you want to raise rather than the number of shares. The broker will execute a sale that meets that cash target, allowing for precise portfolio adjustments even with fractional holdings.

Key investing principles still apply—do your research

Fractional trading lowers the cost of entry, but it doesn’t replace the need for research and a clear strategy. Marques cautions that trading—whether buying whole shares or fractions—requires effort to understand a company’s financials, business model, and risks. For many investors who lack the time or expertise, diversified managed portfolios or robo-advisors may be a more appropriate choice than concentrating on individual stocks.

Boisvert emphasizes that standard investing rules still matter with fractional shares. Consider your time horizon and risk tolerance before allocating money to equities. If you expect to use the funds within a year—such as a down payment on a home—equities’ short-term volatility makes them a risky choice.

Fractional shares can actually help with diversification: they make it easier to buy small amounts of many different stocks or ETFs, spreading risk across holdings. As a guideline, avoid having more than about 5% of your portfolio in any single position, and be cautious about chasing hot stocks driven by fear of missing out.

Boisvert suggests adopting a long-term, buy-and-hold mindset similar to the approach popularized by investors like Warren Buffett—invest in companies you’re comfortable holding for years. Fractional ownership makes it more realistic for many investors to access high-priced names that might otherwise be out of reach, allowing participation in companies across a wide range of price points.

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