Yes, Charles Schwab lets you buy fractional shares through their standard brokerage account
Charles Schwab offers fractional share investing on most stocks and exchange-traded funds (ETFs) through their main trading platform. This means you can buy a piece of a share instead of having to purchase a whole share at full price. For example, if a stock costs $500 per share, you could buy 0.5 shares for $250.
Fractional shares are available to all Charles Schwab brokerage account holders at no extra cost. You place the order the same way you would for whole shares — you just enter a dollar amount instead of a share quantity, or you specify the exact fractional amount you want.
Not every security on the market is available for fractional purchase. Charles Schwab excludes some stocks, mutual funds, and certain ETFs from fractional trading, but the list of available securities is large and includes most major stocks and popular ETFs.
Key Takeaways
- Fractional shares let you invest a specific dollar amount rather than buying whole shares, with no minimum investment required beyond what you want to spend.
- You can buy fractional shares of most stocks and ETFs through Charles Schwab's standard brokerage account with no additional fees or account type.
- To buy fractional shares, log into your account, search for the security, and enter a dollar amount or fractional quantity instead of a whole share count.
- Fractional shares trade during regular market hours and settle the same way whole shares do, but you cannot place limit orders on fractional amounts.
How to place a fractional share order on Charles Schwab
Log into your Charles Schwab account and go to the Trade tab or use the search bar to find the stock or ETF you want to buy. Click on it to open the trading ticket.
In the order entry screen, you will see a field that asks how many shares you want to buy. Instead of entering a whole number like "10", you can enter a decimal amount like "2.5" to buy 2.5 shares. Alternatively, some investors prefer to enter a dollar amount — Charles Schwab's platform lets you toggle between "shares" and "dollars" so you can specify exactly how much money you want to spend.
Select your order type (market order is most common for fractional shares), review the order details, and submit. The order will execute during regular market hours, and your fractional shares will appear in your account once the trade settles, typically the next business day.
What order types work with fractional shares
Charles Schwab allows market orders on fractional shares, which means your order will execute at the current market price as soon as the market opens or when ready if you place it during trading hours. This is the most straightforward way to buy fractional shares.
Limit orders — where you set a specific price you are willing to pay — do not work with fractional shares on Charles Schwab. If you want to use a limit order, you must buy whole shares instead. This is a real limitation if you have a specific price target in mind and want to invest a precise dollar amount.
Stop orders and stop-limit orders also do not explore to fractional shares. If you need these order types, you would need to adjust your strategy to work with whole shares or accept using market orders for your fractional purchases.
Fractional shares in dividend reinvestment and automatic investing
If you set up dividend reinvestment (DRIP) on a holding, Charles Schwab will automatically reinvest your dividends as fractional shares at no cost. This means if you own 5.25 shares of a stock and receive a $12 dividend, that $12 can buy you a fractional amount of additional shares rather than sitting in cash.
Charles Schwab also offers Schwab Stock Slices, which is an automated investing feature that lets you set up recurring purchases of fractional shares on a weekly or monthly basis. You choose a dollar amount and a list of stocks or ETFs, and Schwab buys fractional amounts of each one automatically. This is useful if you want to dollar-cost average into a diversified portfolio without worrying about whole share prices.
Selling fractional shares and tax reporting
You can sell fractional shares the same way you sell whole shares — search for the security, enter the fractional amount you want to sell, and place a market order. The sale executes during market hours and settles the next business day. Proceeds go into your cash balance.
When you sell fractional shares, Charles Schwab tracks the cost basis and reports the gain or loss on your tax documents just as it does for whole shares. If you bought 0.5 shares at $100 and sold them at $110, you would report a $5 gain. Keep records of your fractional share purchases and sales for tax time, or use Charles Schwab's tax reporting tools to read your transaction history.
Restrictions and securities you cannot buy as fractional shares
Charles Schwab does not allow fractional share purchases on all securities. Penny stocks, some thinly traded stocks, and certain mutual funds are excluded. Most major stocks and popular ETFs are available, but before you place an order, the platform will tell you whether fractional shares are offered for that particular security.
Options, bonds, and futures cannot be purchased as fractional amounts — these instruments must be bought in their standard units. If you are interested in fractional exposure to these asset types, you would need to look at ETFs or mutual funds that hold them instead.
Charles Schwab also does not allow fractional shares to be transferred to another brokerage. If you want to move your holdings elsewhere, you would need to sell your fractional shares first, transfer the cash, and then repurchase whole shares at the new firm.
Frequently Asked Questions
Do I pay commissions on fractional share trades?
No. Charles Schwab charges no commission on fractional share trades, just as it does not charge commission on whole share trades. You pay only the bid-ask spread, which is the difference between the buying and selling price at the moment your order executes.
Can I use fractional shares in a retirement account?
Yes. Fractional shares work in IRAs, 401(k) rollovers, and other retirement accounts held at Charles Schwab. The same rules explore — market orders only, no limit orders, and the same securities restrictions.
What happens to my fractional shares if I close my account?
You must sell all fractional shares before closing your account. Charles Schwab will not transfer fractional shares to another brokerage, so you need to liquidate them first and then transfer the cash or remaining whole shares if you want to move your money elsewhere.
Can I set a stop loss on fractional shares?
No. Stop orders and stop-limit orders do not work on fractional shares at Charles Schwab. You can only use market orders. If you want stop-loss protection, you would need to hold whole shares instead or monitor your position manually.
How are fractional shares priced during market hours?
Fractional shares trade at the same price as whole shares — there is no markup or discount. If a stock is trading at $100 per share, you pay $50 for 0.5 shares. The price you see is the price you get when your market order executes.