IBKR Fractional Shares for Global Investors

IBKR's fractional share offering allows investors to buy a portion of a share, making it more accessible to those with limited budgets.

Fractional shares are available for over 30,000 US-listed stocks, with no markup or commission fees.

This feature is particularly useful for investors who want to diversify their portfolios without breaking the bank.

By investing in fractional shares, you can own a piece of a company you love, even if the full share price is out of reach.

IBKR Fractional Shares allow you to buy a portion of a stock, rather than a whole share. This is especially useful for investors with limited capital.

You can buy fractional shares of stocks that are priced above $1,000, such as Amazon or Tesla. This makes investing in these stocks more accessible.

Fractional shares are created by dividing the total value of the investment by the stock's current price. For example, if you invest $100 in a stock priced at $1,000, you'll get 0.1 of a share.

This means you can own a piece of a stock without having to buy a full share.

To set up fractional share trading on Interactive Brokers, you'll need to enable it in your trading permissions under account settings. This will allow you to use the recurring investment feature.

Most people find that a monthly frequency is enough to minimize trading fees, unless you're investing a large amount at each interval. In that case, you might want to consider a less frequent schedule.

You can set up a recurring investment with a specific date, such as the start or middle of each month. This is what the author and their wife have done with their ETF investments over the past 6+ years.

Keep in mind that you can pause, edit, or delete your recurring investments whenever you want, so don't worry if you need to make changes.

You can invest in any eligible US, Canadian or European stock, or ETF, where available, with Ibkr fractional shares.

With Ibkr, you can pick your stock and decide how much you want to invest, which is as easy as it sounds.

The platform allows you to buy or sell fractional shares if the purchase price doesn't result in a whole number of shares.

You can invest as little as $25 in a stock, as seen in the example with NFLX, where $25 invested results in 0.0388 shares.

Here are some examples of stocks and their corresponding investment amounts:

Investing in Europe can be a great way to diversify your portfolio, and exchange traded funds (ETFs) are a popular choice.

Interactive Brokers has recently started rolling out the feature of supported ETFs in Europe, but many are not yet supported. The most popular ones, however, are already covered.

Some of the most popular ETFs, such as Vanguard FTSE All-World Acc. (VWCE) and iShares Core MSCI World Acc. (IWDA), are enabled for recurring investments and fractional shares on Interactive Brokers.

Here are some of the supported ETFs:

More ETFs are being added to the list on a regular basis, so it's likely that the selection will grow significantly over the coming months.

Interactive Brokers' "No Stock is Too Expensive" feature allows you to invest in any eligible stock or ETF, regardless of the purchase price.

You can pick any eligible US, Canadian, or European stock, or ETF, and decide how much you want to invest. If the purchase price doesn't result in a whole number of shares, they'll buy or sell fractional shares.

For example, if you want to invest $25 in NFLX, which has a share price of $644.50, you'll end up with 0.0388 shares. This feature is available for stocks like NFLX, TSLA, GOOG, and AMZN.

Here's a breakdown of how it works for a few stocks:

Keep in mind that trading symbols displayed are for illustrative purposes only and are not intended to portray recommendations.

You can achieve a more diversified portfolio by dividing your investments among more stocks with fractional shares. This allows you to spread your risk and potentially increase returns.

Interactive Brokers is regulated by the US SEC and CFTC, and is a member of the SIPC compensation scheme.

With fractional shares, you can put small cash balances to work quickly to maximize potential returns.

Recurring investments are a great way to automate your investments into stocks or ETFs, allowing you to save time and take emotions out of the equation.

You can set a certain amount to invest at specific intervals, such as weekly, monthly, or quarterly, and let the broker buy the shares for you automatically.

Recurring investments enable dollar cost averaging, which means you can invest a large sum of money without putting everything in at once.

Even fractional shares can be bought using the recurring investment feature, which means your money is fully invested.

This is a game changer, as it allows you to get more shares for your money and fully invest your funds instead of leaving some in cash.

Unless you're investing more than 500-1,000€ at each interval, a monthly frequency is often enough to minimize trading fees.

You can set an end date or the number of installments after which you want your recurring investment to be stopped, and you can pause, edit, or delete your recurring investments whenever you want.

Recurring investments are filled through volume-weighted-average-price orders on the purchase day, which means all customers buying the same ETF get the same average price on their investment.

IB charges the same low commissions for recurring investment trades, so you're not paying extra for the convenience.

You can only create recurring investments for stocks or ETFs that can be traded in fractions.

Building a balanced portfolio is key to achieving long-term financial goals. It's essential to diversify your investments to minimize risk and maximize returns.

To do this, consider using fractional shares, which allow you to divide your investments among more stocks. This can be especially useful for small cash balances.

Interactive Brokers (IBKR) has more fractional shares available across more markets than anyone else. In fact, as of June 16, 2023, IBKR had 10,500 fractional shares available for purchase.

Here's a comparison of some popular brokers and their fractional share offerings:

By using fractional shares, you can put small cash balances to work quickly and maximize potential returns. This can be a great way to get more for your money and achieve a more diversified portfolio.

IBKR fractional shares offer a unique investment option for traders and investors. With a minimum investment requirement of just $1, you can start trading with a small amount of capital.

The ability to buy and sell fractional shares allows you to diversify your portfolio and invest in a wider range of stocks, even if you don't have enough capital to buy a full share. This can be especially beneficial for beginners or those on a tight budget.

IBKR's fractional share pricing is competitive, with a pricing model that's based on the bid-ask spread of the underlying stock. This means you'll pay a lower commission than if you were to buy a full share.

Automating investments on Interactive Brokers can be a bit tricky, but it's definitely doable. You still need to wire your money to Interactive Brokers on time, and it's a good idea to add a few extra euros to cover trading fees.

Many banks don't support recurring payments to IBANs in other countries, but you can set a monthly reminder to wire money to IB. This shouldn't take more than a minute if you set up a payment template with all the details beforehand.

If your bank supports recurring payments to a German IBAN, you can automate everything. For example, Revolut allows this.

Offering fractional share trading can be a game-changer for brokers, attracting younger investors and increasing trading activity. This influx of new clients can lead to a significant increase in account size over time.

Brokers must consider the challenges of bookkeeping and inventory management, which requires investment in information services and inventory management. This can be a costly endeavor.

In a rising market, brokers can benefit financially from holding onto fractional shares, but in a market downturn, they risk losing money alongside their clients. This is a significant risk for brokers to take on.

New brokerage firms launching in the next couple of years will need to offer fractional shares to remain competitive, as zero commissions have already become an industry standard.