For decades, investing in the stock market required buying whole shares — an approach that often priced small investors out of high-growth companies like Amazon or Tesla. That barrier has largely disappeared thanks to fractional share investing, which lets anyone purchase part of a share with just a few dollars. Among U.S. brokerages, Fidelity and Charles Schwab have emerged as leaders, each offering unique approaches to this feature.
This article compares Fidelity vs Schwab fractional share investing, examining how each platform works, the types of securities available, and which investors are most likely to benefit. From minimum investment requirements to order types and dividend handling, understanding the differences can help you make smarter decisions about building and diversifying your portfolio.
Whether you’re starting small, aiming to dollar-cost average into a portfolio, or exploring ways to invest in expensive stocks, knowing how these two brokerage giants handle fractional shares can help you maximize flexibility and efficiency in 2025 and beyond.
What Are Fractional Shares?
Fractional shares, sometimes called dollar-based investing, allow you to buy a portion of a stock rather than a full share. For example, if a stock costs $1,000, you could buy $50 worth, giving you 0.05 shares. This approach has become increasingly popular, particularly for investors who want to:
Access high-priced stocks without a large upfront investment
Build diversified portfolios with small amounts of money
Implement recurring investments or dollar-cost averaging strategies
Fractional share investing democratizes the market, allowing even beginner investors to own pieces of companies that might otherwise be out of reach.
Fidelity Fractional Share Investing (Stocks by the Slice)
Fidelity offers a comprehensive fractional share program called “Stocks by the Slice,” allowing investors to purchase both stocks and ETFs in fractional amounts.
Key Features:
| Feature | Details |
|---|---|
| Eligible Investments | Over 7,000 U.S. stocks and ETFs listed on national exchanges. |
| Minimum Investment | $1 minimum; fractional quantities down to 0.001 shares. |
| Order Types | Market and limit orders supported for fractional and dollar-based trades. |
| Execution Timing | Real-time execution during market hours. |
| Cost / Commissions | Commission-free online for U.S. stocks and ETFs; no extra fee for fractional trades. |
| Accounts Supported | Brokerage accounts, IRAs, HSAs, and custodial accounts. |
| Dividend Reinvestment | Dividends on fractional shares are prorated; automatic reinvestment supported. |
Performance & Usage:
Fidelity’s fractional share program allows both beginners and advanced investors to implement precise investment strategies. You can invest very small amounts regularly, building diversified positions in multiple stocks or ETFs without needing large sums of money upfront.
Expert Tip:
“Fractional shares at Fidelity allow investors to maintain discipline and diversify efficiently, even with limited capital,” notes Christine Benz, Morningstar Director of Personal Finance.
Schwab Fractional Share Investing (Stock Slices)
Charles Schwab offers a similar feature called Stock Slices, designed primarily for S&P 500 companies. Unlike Fidelity, Schwab currently limits fractional share purchases to these large-cap stocks, and ETFs are generally not available for fractional trading.
Key Features:
| Feature | Details |
|---|---|
| Eligible Investments | Only S&P 500 member companies. ETFs generally not eligible for fractional shares. |
| Minimum Investment | $5 per slice; up to 30 slices per transaction. |
| Order Types | Market orders executed in real-time during trading hours. |
| Cost / Commissions | Commission-free for Stock Slices; no additional fees for fractional trades. |
| Accounts Supported | Brokerage accounts, IRAs, and custodial accounts. |
| Dividend Reinvestment | Dividends are prorated; reinvestment into fractional shares is supported. |
| Voting & Transfers | Fractional shares may not carry full voting rights or corporate action privileges; cannot transfer fractional shares to other brokerages without selling. |
Performance & Usage:
Schwab’s Stock Slices make it simple for beginners to invest in high-profile companies like Apple, Microsoft, and Amazon without committing large sums. It’s especially useful for investors who want exposure to blue-chip names in small, manageable increments.
Fidelity vs Schwab: Head-to-Head Comparison
Here’s a side-by-side look at how the two platforms compare on key factors:
| Feature | Fidelity | Schwab |
|---|---|---|
| Eligible Securities | Stocks + ETFs | Only S&P 500 stocks |
| Minimum Investment | $1 | $5 per slice |
| Order Types | Market & Limit | Market only |
| Execution Timing | Real-time during market hours | Real-time during market hours |
| Cost / Commission | Commission-free | Commission-free |
| Dividend Handling | Pro-rated, automatic reinvestment | Pro-rated, automatic reinvestment |
| Voting / Corporate Rights | Fractional shares may have limited rights | Fractional shares may have limited rights |
| Transfers | Cannot transfer fractional shares | Cannot transfer fractional shares |
Strengths & Weaknesses
Fidelity Strengths
Broad universe of stocks and ETFs
Low minimum investment ($1)
Limit orders available for fractional trades
Real-time execution and dividend reinvestment
Fidelity Weaknesses
Fractional shares can’t be transferred to other brokers
Voting rights for fractional shares may be limited
Schwab Strengths
Simple, user-friendly interface
Commission-free trading for S&P 500 Stock Slices
Allows easy exposure to well-known large-cap companies
Schwab Weaknesses
Limited to S&P 500 stocks (no ETF fractional investing)
Slightly higher minimum investment ($5)
Limit orders may not be available for slices
Investor Scenarios
Scenario 1: Beginner with Small Budget
Goal: Build diversified exposure to ETFs and stocks with $30/month
Fidelity: Allows fractional investment in ETFs like VTI and individual stocks simultaneously
Schwab: Can buy slices of S&P 500 stocks but not ETFs, limiting diversification
Scenario 2: Dollar-Cost Averaging
Fidelity: Offers recurring investments in fractional shares of multiple securities, perfect for disciplined investing
Schwab: Can automate purchases in slices of S&P 500 companies, but less flexible for ETFs
Scenario 3: Precision Trading
Fidelity: Supports limit orders, allowing precise entry points for fractional share trades
Schwab: Market orders only, less control over execution price
Tips for Using Fractional Shares Effectively
Start with a clear plan – Decide which stocks or ETFs form your core portfolio before adding fractional positions.
Automate recurring investments – Dollar-cost averaging reduces timing risk and grows holdings steadily.
Diversify efficiently – Fractional shares allow you to spread small amounts across multiple securities.
Monitor expenses – Even fractional ETFs have expense ratios; keep them in mind over the long term.
Understand limitations – Fractional shares may restrict voting rights or corporate actions and cannot easily be transferred to other brokerages.
Track performance – Small positions can multiply; consider using portfolio tracking tools to stay organized.
Pros and Cons Summary Table
| Factor | Fidelity | Schwab |
|---|---|---|
| Flexibility | High (stocks + ETFs) | Moderate (S&P 500 stocks only) |
| Minimum Investment | Very Low ($1) | Low ($5) |
| User Experience | Intermediate – more options | Beginner-friendly – simple interface |
| Dividend Reinvestment | Supported | Supported |
| Order Types | Market & Limit | Market only |
| Suitable For | Diversified investing, recurring small investments | Investing in high-profile large-cap names |
Recent Updates & Market Context
Fidelity now allows real-time fractional share trading for stocks and ETFs.
Schwab Stock Slices provide fractional access to S&P 500 stocks, targeting beginners or investors focused on blue-chip names.
Competition in fractional investing is expanding: many brokerages are adding fractional shares, lower minimums, and ETF eligibility. Investors now have more flexibility than ever to build customized portfolios with minimal capital.
Conclusion
Both Fidelity and Schwab offer powerful fractional share investing options, but the right choice depends on your goals:
Choose Fidelity if you want maximum flexibility, ETF access, tiny minimums, and limit orders for fractional trades.
Choose Schwab if you want a simple, beginner-friendly approach to investing in well-known S&P 500 stocks.
Fractional shares remove traditional barriers to investing, enabling diversification and consistent investing with minimal capital. Understanding the differences between Fidelity and Schwab can help you create a tailored strategy for your portfolio, whether you’re starting with $5 or $500.