Yes, Charles Schwab does sell fractional shares through its Stock Slices program, allowing investors to buy a portion of a company's stock rather than a whole share.
What Are Fractional Shares?
Fractional shares represent a portion of a single share of a company's stock. Instead of purchasing an entire share, which might be expensive for high-priced stocks, investors can invest a specific dollar amount. For instance, if a stock costs \$1,000 per share, you could invest just \$50 and own 0.05 of that share. This makes investing in a wider range of companies more accessible, regardless of their share price.
How Schwab Offers Fractional Shares
Schwab offers fractional share investing through its Stock Slices initiative. This program allows clients to invest in a curated selection of leading U.S. companies by specifying a dollar amount, as little as \$5.
Here's how it works:
- Dollar-Based Investing: Instead of buying a set number of shares, you specify how much money you want to invest in a particular stock (e.g., \$10, \$50, \$100).
- Automatic Conversion: Schwab's system then automatically converts your dollar investment into the corresponding fractional share quantity based on the stock's current market price.
- Eligible Stocks: You can choose stocks from a list displayed within the Stock Slices program. Schwab curates this list to include companies that meet specific criteria, making them suitable for purchase in notional dollar amounts and as fractional shares. This ensures investors have access to a viable selection of stocks for this type of investment.
For more details on how Schwab's Stock Slices work, you can visit their official page: schwab.com/stock-slices.
Benefits of Investing in Fractional Shares
Investing in fractional shares offers several advantages, particularly for new investors or those with limited capital:
- Accessibility to High-Priced Stocks: Own a piece of expensive companies like Amazon or Google without needing hundreds or thousands of dollars for a single share.
- Diversification: Easily spread investments across more companies, even with a smaller budget, reducing risk by not putting all your money into one stock.
- Dollar-Cost Averaging: Facilitates regular, fixed-dollar investments, which can help average out the purchase price over time and reduce the impact of market volatility.
- Lower Barrier to Entry: Makes stock market investing more approachable for individuals who might be intimidated by the cost of whole shares.
- Portfolio Customization: Build a portfolio precisely aligned with your investment goals and risk tolerance, down to specific dollar amounts.
Key Aspects of Schwab's Fractional Shares Program
The table below summarizes the core features of investing in fractional shares through Schwab's Stock Slices:
| Feature | Description |
|---|---|
| Availability | Yes, via the Stock Slices program. |
| Purchase Method | Investors specify a dollar amount to invest, not a number of shares. |
| Minimum Investment | As low as \$5 per slice. |
| Eligible Stocks | A curated selection of U.S. stocks determined by Schwab as viable for fractional purchases. |
| Benefits | Increased accessibility, diversification, dollar-cost averaging. |
By offering fractional shares, Schwab empowers more investors to participate in the stock market and build diversified portfolios, regardless of their starting capital.
