Fractional Investing

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
User avatar
Topic Author
tvubpwcisla
Posts: 502
Joined: Sat Nov 09, 2019 10:09 am

Fractional Investing

Post by tvubpwcisla » Mon May 25, 2020 8:17 pm

More and more large institutions are starting to deploy and rollout Fractional Investing, if they haven't done so already.

You can read about it here - https://www.fool.com/investing/2020/05/ ... -news.aspx

Is anyone taking advantage of it and is there anything to be concerned with?

Thanks,

:?
Stay invested my friends.

User avatar
arcticpineapplecorp.
Posts: 5242
Joined: Tue Mar 06, 2012 9:22 pm

Re: Fractional Investing

Post by arcticpineapplecorp. » Mon May 25, 2020 8:27 pm

is there a reason you want to buy individual stocks (albeit, fractional shares of individual stocks) instead of more diversified no-load index mutual funds?
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

123
Posts: 5964
Joined: Fri Oct 12, 2012 3:55 pm

Re: Fractional Investing

Post by 123 » Mon May 25, 2020 8:29 pm

I used it a couple of times at Fidelity for index ETFs. My experience is that the trade is split between the whole shares and the factional share that results with a higher price (not unexpected) for the fractional share part. If you want to be "fully invested" (no loose change or MMF in your account) fractional investing will not necessarily do that for you. All my trades as executed turned out to be for up to 10 cents less than the total dollar amount I requested due to rounding. (Dollar amount of each trade was over $25K). YMMV
Last edited by 123 on Mon May 25, 2020 8:31 pm, edited 1 time in total.
The closest helping hand is at the end of your own arm.

User avatar
Topic Author
tvubpwcisla
Posts: 502
Joined: Sat Nov 09, 2019 10:09 am

Re: Fractional Investing

Post by tvubpwcisla » Mon May 25, 2020 8:30 pm

arcticpineapplecorp. wrote:
Mon May 25, 2020 8:27 pm
is there a reason you want to buy individual stocks (albeit, fractional shares of individual stocks) instead of more diversified no-load index mutual funds?
Are they going to have Fractional Shares of Index Funds?
Stay invested my friends.

User avatar
JoMoney
Posts: 9331
Joined: Tue Jul 23, 2013 5:31 am

Re: Fractional Investing

Post by JoMoney » Mon May 25, 2020 8:34 pm

tvubpwcisla wrote:
Mon May 25, 2020 8:30 pm
arcticpineapplecorp. wrote:
Mon May 25, 2020 8:27 pm
is there a reason you want to buy individual stocks (albeit, fractional shares of individual stocks) instead of more diversified no-load index mutual funds?
Are they going to have Fractional Shares of Index Funds?
Yes, and that's not new. It's always been the case that you buy open-end mutual funds in whatever dollar amount you wish, with fractional shares down to 3 or 4 decimal places.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

User avatar
David Jay
Posts: 8624
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: Fractional Investing

Post by David Jay » Mon May 25, 2020 8:36 pm

For Bogleheads, it allows ETFs to function more like mutual funds, so one does not have to wait to purchase full shares.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

dru808
Posts: 839
Joined: Sat Oct 15, 2011 2:42 pm
Location: mid pac

Re: Fractional Investing

Post by dru808 » Mon May 25, 2020 8:45 pm

I buy full and fractional share etf’s every Monday. I started at M1 before the big players even offered fractional or free trades.
Last edited by dru808 on Mon May 25, 2020 8:51 pm, edited 1 time in total.
60% US equity | 25% International equity | 15% US Treasury bonds

aristotelian
Posts: 7583
Joined: Wed Jan 11, 2017 8:05 pm

Re: Fractional Investing

Post by aristotelian » Mon May 25, 2020 8:49 pm

I just opened an account at Sofi Invest which does fractional shares. They are offering a bonus for $75 of a stock you choose with $1K to open. No ACATS fee to transfer out, so seems like a no brainer. I chose Teladoc.

I am also a happy customer of M1 and they are running a bonus now, $100 for $20K invested.

User avatar
JoMoney
Posts: 9331
Joined: Tue Jul 23, 2013 5:31 am

Re: Fractional Investing

Post by JoMoney » Mon May 25, 2020 9:04 pm

David Jay wrote:
Mon May 25, 2020 8:36 pm
For Bogleheads, it allows ETFs to function more like mutual funds, so one does not have to wait to purchase full shares.
The old "ShareBuilder" brokerage was much better at doing that. It did fractional shares, and allowed someone to create a 'portfolio' of stocks or ETFs too be purchased on the regular basis and whatever proportions. It would make the purchases once a day at some average market rate so investors didn't even need to setup trade orders... but for some reason that aspect of the brokerage died off after ING sold it, and then Capital One got rid of the brokerage altogether.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

User avatar
phatpodo
Posts: 12
Joined: Wed Feb 13, 2019 6:24 pm

Re: Fractional Investing

Post by phatpodo » Mon May 25, 2020 9:11 pm

What are the fees like for fractional investing?

dru808
Posts: 839
Joined: Sat Oct 15, 2011 2:42 pm
Location: mid pac

Re: Fractional Investing

Post by dru808 » Mon May 25, 2020 9:11 pm

phatpodo wrote:
Mon May 25, 2020 9:11 pm
What are the fees like for fractional investing?
No fees in the US, where available
60% US equity | 25% International equity | 15% US Treasury bonds

Intrepyd
Posts: 74
Joined: Thu Sep 25, 2014 6:34 pm

Re: Fractional Investing

Post by Intrepyd » Mon May 25, 2020 9:17 pm

At Fidelity, for example, the only downside I see is that if you ever want to transfer a position with fractional shares to another brokerage, you will have to liquidate the fractional share portion of the holding -- fractional shares aren't transferable. No biggie IMO.

core4portfolio
Posts: 531
Joined: Thu Dec 26, 2013 2:12 pm

Re: Fractional Investing

Post by core4portfolio » Mon May 25, 2020 9:20 pm

M1Finance and BOA Merill both allow only citizens and permanent residents only.
Fidelity and vanguard allows even visa holders if it matters. Iam happy with fidelity and vanguard :)
Allocation : 80/20 (80% TSM, 20% TBM) | Need to learn fishing sooner

mroe800
Posts: 165
Joined: Mon Jan 27, 2020 1:37 am

Re: Fractional Investing

Post by mroe800 » Mon May 25, 2020 9:57 pm

123 wrote:
Mon May 25, 2020 8:29 pm
I used it a couple of times at Fidelity for index ETFs. My experience is that the trade is split between the whole shares and the factional share that results with a higher price (not unexpected) for the fractional share part. If you want to be "fully invested" (no loose change or MMF in your account) fractional investing will not necessarily do that for you. All my trades as executed turned out to be for up to 10 cents less than the total dollar amount I requested due to rounding. (Dollar amount of each trade was over $25K). YMMV
I have had executions where the fractional trade is more expensive or at the ask but also where the fractional share was at the bid. More so closer to the ask, but at least you’re not always getting the high price for the fractional share.

User avatar
Redstorm
Posts: 156
Joined: Thu May 02, 2013 2:43 pm

Re: Fractional Investing

Post by Redstorm » Tue May 26, 2020 2:23 am

ACORNS is fractional investing isn't it?

RomeoMustDie
Posts: 154
Joined: Sat Mar 14, 2020 6:07 pm

Re: Fractional Investing

Post by RomeoMustDie » Tue May 26, 2020 3:02 am

It's so convenient that I'd never be a customer of a brokerage that didn't offer it.

Culbretd
Posts: 126
Joined: Sat Mar 24, 2018 4:06 am

Re: Fractional Investing

Post by Culbretd » Tue May 26, 2020 3:53 am

core4portfolio wrote:
Mon May 25, 2020 9:20 pm
M1Finance and BOA Merill both allow only citizens and permanent residents only.
Fidelity and vanguard allows even visa holders if it matters. Iam happy with fidelity and vanguard :)
BOA/Merrill Edge is now allowing fractional shares? I use ETFs at Merrill Edge and have been buying whole shares, didn’t know I had the option of fractional shares with them.

User avatar
cos
Posts: 121
Joined: Fri Aug 23, 2019 7:34 pm
Location: Boston
Contact:

Re: Fractional Investing

Post by cos » Tue May 26, 2020 5:24 am

I started out with the big robos, Betterment and Wealthfront, before properly discovering and fully realizing the ways of the Bogleheads. The former offered fractional investing with a poor choice of funds while the latter only allowed whole-share investing with a slightly better choice of funds. Both had a rather unnecessary 0.25% fee that they added on top of fund expense ratios.

I ended up migrating all of my investable assets to M1 Finance a couple years ago because, at the time, they were the only place that offered fractional investing in my choice of ETFs with no fees or commissions. I've been a happy customer ever since.

I started out fractionally investing in a very Bogleheadish small-cap-value-tilted four-fund portfolio before later finding myself seduced by HEDGEFUNDIE's all-too-sweet siren song. Both my original strategy and my current one were only made possible by the advent of fractional ETF investing. This is definitely a very underappreciated revolutionary change in the investment industry, especially for those of us just getting started at a young age.

core4portfolio
Posts: 531
Joined: Thu Dec 26, 2013 2:12 pm

Re: Fractional Investing

Post by core4portfolio » Tue May 26, 2020 8:25 am

Culbretd wrote:
Tue May 26, 2020 3:53 am
core4portfolio wrote:
Mon May 25, 2020 9:20 pm
M1Finance and BOA Merill both allow only citizens and permanent residents only.
Fidelity and vanguard allows even visa holders if it matters. Iam happy with fidelity and vanguard :)
BOA/Merrill Edge is now allowing fractional shares? I use ETFs at Merrill Edge and have been buying whole shares, didn’t know I had the option of fractional shares with them.
You are right - BOA doesnt allow fractional
Allocation : 80/20 (80% TSM, 20% TBM) | Need to learn fishing sooner

Culbretd
Posts: 126
Joined: Sat Mar 24, 2018 4:06 am

Re: Fractional Investing

Post by Culbretd » Wed May 27, 2020 12:13 pm

core4portfolio wrote:
Tue May 26, 2020 8:25 am
Culbretd wrote:
Tue May 26, 2020 3:53 am
core4portfolio wrote:
Mon May 25, 2020 9:20 pm
M1Finance and BOA Merill both allow only citizens and permanent residents only.
Fidelity and vanguard allows even visa holders if it matters. Iam happy with fidelity and vanguard :)
BOA/Merrill Edge is now allowing fractional shares? I use ETFs at Merrill Edge and have been buying whole shares, didn’t know I had the option of fractional shares with them.
You are right - BOA doesnt allow fractional
Ahh man, you had my hopes up! They will eventually come around.

FitnFin
Posts: 13
Joined: Thu Feb 27, 2020 2:48 pm

Re: Fractional Investing

Post by FitnFin » Wed May 27, 2020 12:48 pm

Intrepyd wrote:
Mon May 25, 2020 9:17 pm
At Fidelity, for example, the only downside I see is that if you ever want to transfer a position with fractional shares to another brokerage, you will have to liquidate the fractional share portion of the holding -- fractional shares aren't transferable. No biggie IMO.
Also, as a side note, you can currently only purchase fractional ETF shares via the Fidelity Mobile App and not the online platform. I would hope it would encompass all platforms in the near future.

User avatar
jhfenton
Posts: 4624
Joined: Sat Feb 07, 2015 11:17 am
Location: Ohio

Re: Fractional Investing

Post by jhfenton » Wed May 27, 2020 1:02 pm

Fractional shares will be table stakes in a few years. I like buying fractional shares in my Fidelity HSA—so far, I have still ended up with an orphaned $0.01 every time, because of rounding—but I wouldn't move brokers just or primarily to get access to fractional shares.

I don't know how close they are, but even Vanguard is currently looking at it. Orphaned pocket change in our retirement accounts is much more annoying than it is significant.

TropikThunder
Posts: 2339
Joined: Sun Apr 03, 2016 5:41 pm

Re: Fractional Investing

Post by TropikThunder » Fri May 29, 2020 11:18 pm

Intrepyd wrote:
Mon May 25, 2020 9:17 pm
At Fidelity, for example, the only downside I see is that if you ever want to transfer a position with fractional shares to another brokerage, you will have to liquidate the fractional share portion of the holding -- fractional shares aren't transferable. No biggie IMO.
That’s already the case with the fractional shares you get from reinvesting dividends.

Post Reply