How to Buy Fractional Shares on E*TRADE

E*TRADE offers fractional shares through its Fractional Shares program, which lets you buy a portion of a stock instead of a whole share

E*TRADE's Fractional Shares feature allows you to purchase less than one full share of a stock or exchange-traded fund (ETF). This means you can invest a specific dollar amount — say $50 — in a company whose stock price is $150 per share, and you'll own one-third of a share rather than being forced to buy a full share or nothing at all. The program launched in 2020 and is available to most E*TRADE account holders.

Fractional shares trade during regular market hours (9:30 a.m. to 4:00 p.m. Eastern Time on weekdays when the market is open). You place an order the same way you would for whole shares, but you specify the dollar amount you want to invest instead of the number of shares. E*TRADE executes the order at the market price during that trading session.

Key Takeaways

E*TRADE fractional shares work with stocks and most ETFs, but not with options, mutual funds, or bonds.
You can buy fractional shares with as little as $1, though some stocks may have a $5 minimum depending on their price.
Fractional shares are held in your regular brokerage account and can be sold at any time during market hours.
Dividend payments on fractional shares are calculated proportionally — if you own 0.5 shares and the dividend is $2 per share, you receive $1.

Which securities work with fractional shares on E*TRADE

E*TRADE fractional shares cover most U.S.-listed stocks and many ETFs. You can buy fractional shares in large-cap companies, small-cap stocks, and everything in between. The program includes stocks from all major exchanges: the New York Stock Exchange (NYSE), NASDAQ, and others.

Some securities are excluded. You cannot buy fractional shares of options, mutual funds, bonds, or penny stocks (stocks trading below $5 per share in some cases). International stocks listed on U.S. exchanges may have restrictions depending on the specific security. If you search for a stock on E*TRADE and the fractional shares option does not appear, that particular security is not available for fractional purchase.

How to place a fractional shares order

To buy fractional shares on E*TRADE, log into your account and search for the stock or ETF you want. Click on the security to open its detail page. Instead of entering the number of shares, look for the option to enter a dollar amount. Type the dollar amount you want to invest — E*TRADE will calculate how many fractional shares that represents at the current market price.

Review the order details, including the estimated number of shares and the total cost. Place the order during market hours for execution that same day. If you place an order after market close (after 4:00 p.m. Eastern Time), it will execute the next trading day at the opening price or shortly after.

Once your order fills, the fractional shares appear in your account when ready. You can see them listed alongside any whole shares you own in that same security. Your account statement and holdings page will show fractional shares as decimals (for example, 2.75 shares).

Minimum investment amounts for fractional shares

E*TRADE allows fractional share purchases starting at $1 for most stocks. However, the actual minimum can vary based on the stock's price. A stock trading at $200 per share would require at least $1 to buy a fractional share, but some very high-priced stocks may have a $5 minimum to may support you receive a meaningful fraction.

There is no maximum dollar amount per order, so you can invest $10, $100, $1,000, or more in a single fractional share purchase. The only limit is the cash available in your account.

Selling fractional shares and tax implications

You can sell fractional shares at any time during market hours the same way you sell whole shares. You do not need to wait until you accumulate a full share. straightforward place a sell order for all or part of your fractional position, and E*TRADE executes it at the market price.

When you sell fractional shares, you may have a capital gain or loss depending on the difference between what you paid and the sale price. E*TRADE reports these transactions on your tax documents (Form 1099-B). Keep records of your purchase price and sale price for each fractional share transaction to calculate your gain or loss accurately when filing taxes.

Dividends paid on fractional shares are calculated proportionally. If a company pays a $2 dividend per share and you own 0.5 shares, you receive $1. These dividend payments appear in your account as cash and are reported on your tax documents as dividend income.

Account types that support fractional shares

Fractional shares are available in most E*TRADE account types, including individual brokerage accounts, joint accounts, and IRAs (both Traditional and Roth). The feature is also available in E*TRADE custodial accounts for minors and some trust accounts.

If you have a margin account, you can buy fractional shares on margin, meaning you can borrow money from E*TRADE to purchase them. Fractional shares held on margin are subject to the same margin requirements and interest charges as whole shares. Check your account type in E*TRADE's account settings to confirm fractional shares are enabled.

Frequently Asked Questions

Can I set up automatic fractional share purchases on E*TRADE?

E*TRADE does not offer automatic recurring fractional share purchases through a built-in dividend reinvestment plan (DRIP) for fractional shares. You must place each fractional share order manually. However, you can set up alerts to remind yourself to invest on a regular schedule.

What happens to fractional shares if I transfer my account to another brokerage?

When you transfer your E*TRADE account to another brokerage, fractional shares are typically converted to whole shares and cash. For example, if you own 2.75 shares of a stock worth $100 each, the receiving brokerage may deliver 2 whole shares and $75 in cash. The exact process depends on the receiving brokerage's policies.

Do fractional shares have voting rights?

Fractional shares carry voting rights proportional to your ownership. If you own 0.5 shares and there is a shareholder vote, you receive 0.5 votes. E*TRADE will send you voting materials if you own any fractional shares in a company holding a shareholder meeting.

Are there any fees for buying or selling fractional shares?

E*TRADE charges no commission on fractional share trades. You pay the same zero commission as you would for whole share trades. The only cost is the bid-ask spread, which is the difference between the buying and selling price at the time of your order.

Can I buy fractional shares of index funds or ETFs?

Yes, most ETFs are available for fractional share purchase on E*TRADE. This includes broad market index ETFs, sector ETFs, and bond ETFs. Mutual funds are not available for fractional purchase, but ETFs offer a similar way to track an index with fractional ownership.

This guide is for general information only and is not medical, financial, legal, or other professional advice. For decisions specific to your situation, consult a qualified professional. See our Editorial Policy.