One of the biggest investing myths is that you need to have large amounts of cash to begin investing in companies such as Google, Tesla, Microsoft, etc.
A novice might check the share price of Tesla, which is currently trading at $817, and think that the minimum amount of money they need to even start investing in a company, such as Tesla, is $817. But this is not true due to the existence of fractional share investing.
Instead of buying one whole share, fractional share investing allows you to buy just a small portion of a fraction of a share. For example, you could buy 0.1 of a Tesla share which would just cost you $81.70 at current market prices.
The beauty of fractional share investing is that it completely democratises investing for everybody, you do not need to have large sums of capital to own a small piece of large multinational companies.
Ideally, a beginner investor will want to sign up for a brokerage that has the feature of fractional share investing. It is important to check this out before you choose what brokerage to sign up for.
What brokerages offer fractional shares to Irish investors?
Bux Zero are one of the newest investment brokerages offering their services to the people of Ireland.
Currently Bux Zero offer fractional share investing on a limited basis only (Available on selected US stocks and 20 major ETFs). This is likely to be extended in the near future. You can buy fractional shares on Bux Zero from as little as €10.
Get a free share worth up to €200 when you sign up with Bux Zero.
Trading 212 are another brokerage that offer fractional share investing to Irish investors from as little as €1.
Fractional share investing works similar to normal investing on Trading 212 except for you cannot make limit orders when buying fractional shares and you cannot transfer them to another investment firm if you are moving your investment portfolio.
Get a free share up to €100 when you sign up for a Trading 212 account.
Individual Irish accounts on Interactive Brokers including Lite customers are eligible for fractional share trading from as little as €1. You can even short stocks on Interactive brokers if you have a margin account.
Fractional share investing is available for U.S. and European stocks and ETFs, (but not every security under these categories).
If you own a stock that becomes ineligible for fractional share investing then the position will be automatically closed.
Revolut are another option if you are looking for a place to trade fractional shares. While they currently do not have ETFs, most people already have a Revolut account in Ireland so it might be an easy option if you want to start quickly.
If you are on their standard account you will just get one commission-free trader per month. The fees after this are greater of €1 or a variable fee of 0.25%.
Just be aware that as Revolut isn’t really a registered broker your investments are not covered by any investor protection schemes unlike the other brokers I have talked about in this blog post.
Social trading platform eToro is another option for Irish investors and they also offer fractional share investing.
Downsides with fractional share investin on eToro
- Clients waive any rights to vote
- Shares cannot be transferred outside the eToro platform
- Not all publicly traded stocks are available yet on the eToro platform
Brokerages that do not allow fractional share investing
Not all brokerages offer available to Irish investors offer fractional share investing. Here are some brokerages that currently do not offer it as a service:
Are you still entitled to dividends when fractional share investing?
Generally brokerages will pay you the equivalent amount of dividend income you are due even if you only own a fraction of a share but this can vary depending on the policy of the brokerage.
For example the policy of Trading 212 is “any dividend payable to you will be on a pro-rata basis to reflect your fractional entitlement”.
Disclaimer: This blog post is for informational and educational purposes only and should not be construed as financial advice. Irishfinancial.ie is a participant in the Trading 212 and Bux Zero affiliate program designed to provide a means for sites to earn advertising fees by providing leads.