Demystifying Fractional Shares: How to Buy Top US Stocks with Just $1

For decades, the high price tags of major US stocks locked out many retail investors. But with the introduction of fractional shares, democratized investing has taken a giant leap forward. Now, you don't need hundreds or thousands of dollars to own a piece of your favorite companies.

What Are Fractional Shares?

As the name implies, a fractional share is a portion of a whole stock. Instead of buying shares based on quantity (e.g., buying one single share), you buy them based on a dollar amount. Even if a single share costs $500, you can invest just $10 and own 2% of that share.

Why It Matters for Indian Investors

US stocks can be expensive in Rupee terms, especially with exchange rates and LRS transfer fees. Here's why fractional shares make global diversification practical:

• Accessibility: High-priced stocks like Berkshire Hathaway or certain tech giants become accessible to any portfolio size.
• Dollar-Cost Averaging (SIP): You can set up exact-dollar SIPs (say, $50 every month) into a stock or ETF, ensuring your money is always fully invested without leaving cash dragging in your account.
• Precise Diversification: With just $100, you could theoretically buy fractional shares of 10 different $300 stocks, building a well-rounded portfolio instantly.

Are You Missing Out on Dividends and Voting Rights?

No! You still receive dividends proportional to the fraction you own. If a company pays a $1 dividend per share and you own 0.5 shares, you will receive $0.50. However, voting rights can vary by broker—some allow proxy voting on fractional shares, while others may not.