Invest Smarter, Not Bigger: A Beginner’s Guide to Fractional Stocks

20 Jan 2026

In the past, investing in some of the world’s most valuable companies often meant shelling out hundreds or even thousands of dollars for a single share. For many everyday investors, that presented a barrier to entry. Today, however, with fractional stocks, it is now easier than ever to start investing – even with a modest capital.

In this article, we’ll explain what fractional stocks are, how they work, and why you should consider them when building your own trading portfolio.

What Are Fractional Stocks?

Fractional stocks, or fractional shares, represent a portion of a full share of a company’s stock. Instead of buying a whole share of a company like Apple, Tesla, or Amazon, which can cost hundreds or thousands of dollars, investors can purchase a fraction of a share for a lower amount that fits their budget.

For example, if a single share of Company XYZ trades at $1,000, and you invest $100, you’d own 0.1 shares – your proportionate piece of that stock. You may be pleased to know that with Phillip Nova, you can purchase a fractional stock with a budget from as low as $1!

How Do Investors Use Fractional Stocks?

Lower Barrier to Entry

Fractional investing enables anyone to start investing, regardless of their account size. It’s an excellent way for beginners or younger investors to enter the market, build confidence, and diversify their portfolio without needing a large upfront investment.

Diversification with Limited Funds

Diversification is a key principle of risk management in investing. Fractional shares allow investors to spread their money across multiple companies and sectors, rather than concentrating it in one or two full shares.

Example: With $500, an investor could buy fractional shares of five US companies in different sectors instead of being limited to one or two full sized Tech stocks.

Dollar-Cost Averaging (DCA)

Fractional shares work seamlessly with DCA strategies, where investors invest a fixed amount regularly, regardless of the stock price (e.g., $100 every month). This helps reduce the impact of market volatility over time and builds wealth gradually.

With DCA, when prices are high, you buy fewer shares; when prices are low, you buy more. Over time, this can lower your average cost per share.

DCA also encourages regular investing habits, which helps build long-term wealth while removing the emotion and guesswork from investing.

Access to High-Priced Stocks

Investors no longer need to wait for stock splits or price drops. Fractional shares give direct access to premium stocks at a price point that works for everyone. This includes easier access to tech giants like Meta, Apple, Amazon, Netflix and Google!

Why It Matters in Today’s Market

In an era of financial democratisation, tools like fractional shares empower retail investors to get started with building their portfolio even with a modest budget and helps to make investing accessible for everyone.

Additionally, whether you’re a first-time investor or an experienced trader looking to optimise your strategy, fractional investing adds flexibility, accessibility, and efficiency to your financial toolkit.

Invest in Fractional Shares from just $1, at a flat fee of USD0.38. Click here to learn more now!

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An Exchange Traded Fund (ETF) is a marketable security that is formed to track nearly anything, ranging from a specific index, sector, commodity, or increasingly, theme. They are most commonly used to track a basket of stocks, and can typically be accessed through the same channels as regular stocks. ETFs are typically separated into passively-managed ETFs that simply mirror the security they are tracking (e.g. the STI), and actively managed ones that attempt to deliver higher returns or specific investment objectives, often with a pre-specified theme in mind (e.g. ARK Invest’s Innovation ETF).

Why should I trade in ETF CFDs?

ETFs have been growing in popularity over the years. 2020 was the best year for ETFs yet, with global equity ETFs seeing more than $1T in inflows within a 12-month period. Using CFDs to gain exposure to ETFs allows for greater capital efficiency because only a portion of the contract value is required as margin to establish a position.
ETFs are particularly popular with investors seeking a relatively hassle-free investing experience, while desiring exposure to a range of specific and relatively understandable securities. Trading ETF CFDs brings greater convenience by eliminating the need for traders to hold multiple currencies in order to access global ETFs.
An investor wanting exposure to the post-pandemic economic recovery could open a position in the well-known SPDR S&P 500 ETF (SPY), which tracks the performance of the S&P 500. Another investor that may be convinced of the future importance of Environmental, Social and Governance concerns (ESG) may find the increasing selection of ESG-themed ETFs that track a basket of high ESG-rating companies to be a good investment, rather than cherry-picking individual equities by hand. ETF CFDs can act as a powerful tool for traders can profit from both directions of the market by taking on long or short positions.

A look at two ETF CFDs we offer:

1) Has the ARKK been sunk?

ARK Innovation ETF (ARKK) ARKK is an actively managed ETF by ARK Invest that invests in a range of companies based on their innovative and industry-disrupting potential. ARKK’s largest holdings are in companies such as Tesla, Square, and Zoom. ARKK is down around -33% from peaking on 12^th Feb and is currently in the red for the year to date as the market experiences a risk-off outflow of funds. Superstar fund manager Cathie Wood has however been consistently doubling down on her bets, buying even more shares in growth stocks that are going through their own tumultuous periods such as DraftKings, Peloton, Teladoc, and Tesla. In her view, ARKK is playing the long game, and remains steadfastly convinced in the long-term prospects of these growth stocks beyond this current bout of volatility. Similarly on outflows, investors are still betting big on ARKK as ARK Invest has only lost about $1.2B in assets this year across all its six funds, compared to seeing an inflow of $15.1B during the same period. Recently, investors have been nervously eyeing ARKK’s basket of tech stocks as their future earnings potential remain vulnerable to erosion through high inflation – the dominant concern of the market in recent weeks. As commodities – the major contributor to the recent heightened inflation fears – drops sharply from record highs, are investor concerns over hyperinflation overblown?

2) Searching for exposure to Asian equities?

iShares MSCI Asia ex Japan ETF (AAXJ) The AAXJ is currently trading -10.6% adrift of all-time highs seen in February, giving up gains in tandem with an Asia-wide equity sell-off at the time. Given that slightly over 40% of the ETF’s holdings are based in China, the ongoing tumult seen in Chinese equities currently have carried over nearly perfectly in the AAXJ, as Chinese investors take a breather after the stellar gains made over the past year. Looking ahead, Asia – and particularly China, is steaming ahead with its economic recovery. China is widely expected to be one of the best-performing major economies this year, providing a major boost to the outlook for corporate earnings. As the rest of Asia and the world gradually opens up their own economies, AAXJ is likely to again benefit from strong Asian outperformance amidst a strengthening trade outlook.

CFD is available for trading on Phillip MetaTrader 5 (MT5).

Features of trading CFD:

Trade in both the bull and the bear markets
The ability to enter a long and/or short position allow traders to take advantage of both rising and falling markets.
Smaller barrier to entry
Flexible and smaller contract sizes. This means that traders will be able to enter into a contract with a modest amount of capital.
No expiration date or risk of delivery
Unlike futures which commonly have a fixed expiration date, CFD allows traders to perpetually hold the position(s). CFD is cash settled, no need to worry about the delivery of the underlying asset.

Benefits of using Phillip MT5:

Trade at zero commission on a dynamic platform that offers low spreads. Integrated with Autochartist and Trading Central Indicators, and available on mobile, web and desktop app, you will never miss a trading opportunity with Phillip MT5.

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