Yes, Fidelity lets you buy fractional shares through most of its investment accounts

Fidelity offers fractional share trading on stocks and exchange-traded funds (ETFs) in most brokerage accounts, including individual accounts, IRAs, and 401(k)s. You can buy as little as $1 worth of a stock, which means you don't need $500 or $1,000 to own a share of an expensive company. Fractional shares trade during regular market hours — 9:30 a.m. to 4 p.m. Eastern Time on weekdays when the market is open.

The main limitation is that fractional shares are not available for penny stocks, over-the-counter (OTC) stocks, or mutual funds. If you're buying a stock that trades on a major exchange like the Nasdaq or New York Stock Exchange, fractional shares are available.

Key Takeaways

  • Fractional shares are available on stocks and ETFs through Fidelity's standard brokerage accounts, IRAs, and 401(k)s, but not on penny stocks or mutual funds.
  • You can purchase fractional shares in dollar amounts as small as $1, letting you invest in high-priced stocks without saving up for a full share.
  • Fractional shares trade only during regular market hours, not before or after the market closes.
  • Fidelity does not charge a commission on fractional share trades, though the bid-ask spread (the difference between buy and sell prices) still applies.

How to place a fractional share order on Fidelity

On Fidelity's website or mobile app, navigate to the trade ticket for the stock or ETF you want to buy. Instead of entering a number of shares, select the option to buy by dollar amount. Enter the dollar amount you want to invest — for example, $50 or $100 — and Fidelity will calculate how many fractional shares that buys at the current price.

Review the order details, including the estimated number of shares and the price per share, then submit. The order executes at the next available price during market hours. If you place the order after the market closes, it will execute the next trading day when the market opens.

If you're used to buying whole shares, the main difference is that you'll see decimals in your holdings. For example, you might own 2.5 shares of a stock instead of 2 or 3. Your account statements and tax documents will reflect the exact fractional amount you own.

Fractional shares in dividend reinvestment and automatic investing

Fidelity's dividend reinvestment plan (DRIP) automatically buys fractional shares when your dividends are reinvested. If you own 10 shares of a stock that pays a $50 dividend and the stock price is $120 per share, the dividend buys 0.42 shares instead of waiting until you have enough cash for a whole share.

Fidelity's automatic investing feature also uses fractional shares. If you set up a recurring investment of $200 per month into a specific stock or ETF, Fidelity buys whatever fractional amount that $200 purchases at the time of the transaction. This removes the friction of waiting to accumulate enough cash for a whole share.

What you pay when you buy fractional shares

Fidelity does not charge a commission on fractional share trades. However, you still pay the bid-ask spread, which is the difference between what buyers are willing to pay and what sellers are asking. On liquid stocks (those with high trading volume), the spread is usually very small — a few cents. On less-traded stocks, the spread can be wider.

The spread is built into the price you see when you place the order. You don't pay it as a separate fee, but it does reduce the value of your purchase slightly. For example, if a stock's bid price is $99.50 and the ask price is $99.60, you pay $99.60 when you buy.

Selling fractional shares and tax implications

You can sell fractional shares on Fidelity the same way you sell whole shares — through the trade ticket, selecting the number of shares (including decimals) you want to sell. The order executes at the next available market price. There is no commission on the sale.

When you sell fractional shares, you owe capital gains tax on any profit. If you bought 0.5 shares at $100 per share ($50 total) and sold them at $120 per share ($60 total), you have a $10 gain. Fidelity reports fractional share transactions on your tax documents, so your cost basis and sale price are recorded accurately.

Fractional shares in retirement accounts

Fractional shares work the same way in traditional IRAs, Roth IRAs, and SEP IRAs as they do in taxable accounts. You can buy fractional shares with dollar amounts, and dividends reinvest into fractional shares automatically. The tax treatment differs — gains in a traditional IRA are tax-deferred, and gains in a Roth IRA are tax-free — but the mechanics of buying and selling fractional shares are identical.

In a 401(k), fractional shares depend on your plan's rules. Some employer plans allow fractional share purchases, while others require whole shares only. Check your plan documents or contact your plan administrator to confirm what's available in your specific 401(k).

When fractional shares are not available

Fractional shares are not available for penny stocks (stocks trading below $5 per share on certain exchanges), OTC stocks (those not listed on major exchanges), or mutual funds. If you try to buy a fractional amount of an unavailable security, Fidelity will prompt you to enter a whole number of shares instead.

Fractional shares also do not trade outside regular market hours. If you place an order before 9:30 a.m. or after 4 p.m. Eastern Time, it will execute at the next market open. Extended-hours trading (available on some stocks through Fidelity) does not support fractional shares.

Frequently Asked Questions

Can I set a limit price when buying fractional shares?

Yes. When you place a fractional share order, you can set a limit price just as you would for whole shares. The order executes only if the stock reaches your specified price or better. This works the same way whether you're buying by share count or by dollar amount.

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

Most brokerages accept fractional share transfers, but the receiving firm may round them to whole shares or liquidate them. Before transferring, contact the receiving brokerage to confirm their policy. Fidelity will transfer fractional shares as-is if the receiving firm supports them.

Do fractional shares count toward Fidelity's account minimums?

Fractional shares count toward your account balance for minimum balance requirements. If your account type requires a $2,500 minimum and you hold $2,000 in whole shares plus $600 in fractional shares, you meet the minimum.

Can I buy fractional shares of ETFs?

Yes. Fractional shares are available on most ETFs through Fidelity. You can buy by dollar amount just as you would with stocks. This is useful for ETFs with high share prices, where a single share might cost $300 or more.

What if the market price changes between when I place my order and when it executes?

Your order executes at the market price at the time of execution, not the price you saw when you placed the order. If you want to control the price, use a limit order. The fractional amount you receive will adjust based on the actual execution price.