Hi there! If you are reading this article, you probably heard of DEGIRO, one of the most popular stock brokers in Europe, and want to know if they offer fraction share trading.
In this article, we will explain what fractional sharing trading is, its pros and cons, if DEGIRO offers this way of investing, and other brokers that provide the possibility to buy fractional shares.
What is DEGIRO, and what are fractional shares?
DEGIRO is one of Europe’s leading brokers known for its low-cost structure, offering commission-free trading of stocks and ETFs to its investors. You can read more about DEGIRO in our DEGIRO review.
Fractional Shares allow an investor to buy less than a unit of a share. For example, imagine that company XYZ was trading at €1,000€ per share. If you wanted to buy one share of XYZ, you would need to pay €1,000 for it. €1,000 is an amount that investors might not have or won’t be willing to pay. However, if you have just €10 to invest, fractional shares will allow you to acquire 0.01 shares from XYZ and this way, you can still be invested in the company!
Does DEGIRO offer fractional shares?
The answer is no. DEGIRO does not have fractional shares. There is also no indication that DEGIRO will introduce this feature in the near future.
However, other brokers offer fractional trading. With its growing popularity, the trend is for more and more brokers to add this feature.
DEGIRO alternatives for fractional shares trading
Below we present some DEGIRO alternatives that support fractional shares trading:
Interactive Brokers
Founded in 1978, IBKR is one of the world’s most trustworthy brokers worldwide. The minimum amount to invest in fractional shares is $1 for eligible US and European stocks and ETFs, regardless of the share price.
💡 Interactive Brokers also launched IBKR GlobalTrader, a modern mobile trading app to trade Stocks, Options and ETFs, ideal for novice investors.
eToro
A modern and easy-to-use broker available worldwide that offers free commissions on stocks and ETFs and the possibility of belonging to a community of investors where you can follow and replicate what they are doing. You can buy fractional shares starting at $10.
Trading 212
An easy-to-use broker that offers commission-free trading on stocks and ETFs. With just €1, you can start buying fractional shares, although Trading 212 has a limited range of financial instruments and charges a 0,15% currency conversion fee. It is the only one with an auto-invest feature that allows you to automate your investments. New users get one free share of up to €100 by using the code IITW.
Revolut Trading
Within the Revolut app, you can find Revolut Trading. It has a simple to use platform that will allow you to buy fractional shares and automate your investments. However, it misses the mark when it comes to the variety of financial products. You can only invest in US Stocks, crypto and precious metals, don’t offer the possibility to invest in ETFs, and only have one commission-free stock trade per month.
Pros and Cons of trading fractional shares
Pros
- Invest with small amounts of money
- Build a diversified portfolio easily
- You can buy into companies no matter the share price
- Great for auto investing and dollar-cost averaging
Cons
- Can lead to poor investment decisions by new investors
- Inflated share prices (the risk that the higher-priced stocks become inflated due to now being accessible to everyone)
- Liquidity (since you only have a fraction of a share, your broker needs to find other people either to buy or sell to fill the remaining portion to make up a whole share)
- Possibility to rack up fees
The bottom line
If you are looking to invest in fractional shares, then DEGIRO is not your broker.
However, many other brokers offer this service. We suggested looking at the alternatives presented above – explore the websites and decide for yourself! Please read our broker reviews if you need additional information about these brokers.
There is no doubt that fractional investing has its merits and is growing in popularity, but be aware that your money will always be at risk, no matter the amount.
Toni is a Fintech Analyst with over 8 years of experience in the financial industry where he worked as a financial control analyst at a regional bank and later conducted independent investment research analysis.
