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Fractional shares hidden cost

Fractional shares are the coolest things since the slide of bread was invented. If a stock current share price is at $1,000 and you only have $10 to your name, it allows you to buy a fraction of that stock for just $10, Hence, the name fractional shares. With regular shares you would not able to buy that regular stock if you don’t have the $1,000

Supposedly, if you buy enough fractional shares eventually , they can be consolidated into a whole share. Just like if you had bought a singular share at the cost of $1,000

Must brokers says zero fees, so there is no selling or buying fees.

Fractional shares hidden cost?

Before you sign up for any brokerage you out to check if there is a hidden cost of fractional shares. there is supposed to be no fees but some brokers have fees

  • Trading commissions, they are supposed to be free but some brokers has fees
  • Brokers fees, the may have a fee charge yearly or monthly even though they are suppose to be free
  • Price difference, The market makers match best offer however with fractional shares there made be a slight markup
  • Regulatory fees, fees pass to the brokers and brokers pass these fees to the customers.

Final thoughts

Nowadays, there are a bunch of commission free brokers, therefore there is no reason to pay fees. However, before you sign up, check the terms and conditions because they might be hidden fees.

Best of luck

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