For new investors, one of the biggest hurdles can be psychological: the idea that you need thousands of dollars before you can meaningfully enter the stock market. Fractional shares are changing that equation. Instead of buying one complete share, investors can purchase a small piece of a share, allowing them to start with an amount that fits their budget.
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How fractional shares work
The concept is straightforward. Suppose a stock costs $1,000 and you have $100 available to invest. With fractional investing, you could purchase 0.10 of a share rather than waiting until you have enough money for a full share. Your investment rises and falls with the stock’s performance, just like a whole share.
For beginners, this can make disciplined investing easier. Rather than trying to save enough for a full share, you can invest a fixed dollar amount regularly. This works well for dollar-cost averaging, which is an investment strategy where you invest a fixed amount of money at regular intervals (such as monthly or every few months), no matter how the market is moving.
Fractional shares can also help diversify a smaller portfolio because the same $100 could potentially be divided among several companies rather than committed to one stock.
Wealthsimple is a platform that allows for buying fractional shares with no trading costs.
Fairfax Financial and Alphabet as stock examples
Consider Fairfax Financial (TSX: FFH), a Canadian financial holding company focused primarily on property and casualty insurance, reinsurance and investment management.
Led by founder and CEO Prem Watsa, Fairfax aims to grow its book value per share by 15% annually over the long term by using a decentralized, “two-engine” model that pairs disciplined insurance underwriting with a value-oriented, opportunistic total-return investment approach.
Over the last decade, the stock earned 3.6 times investors’ money, returning about 13.7% per year with dividends reinvested.
Fairfax can serve as an example of how fractional investing can make a Canadian-listed company accessible to investors who aren’t ready to purchase a full share.
The stock trades around $2,200 per share at writing, while the analyst consensus price target suggests a discount of about 19%. On Wealthsimple, investors can invest the exact dollar amount they want (such as $100) for fractional shares.
Alphabet (TSX: GOOG) is a different example. Alphabet is a global technology company, well known as the parent of Google. On the NASDAQ, the stock trades at about US$347 per share.
Its shares are also available to Canadian investors as TSX:GOOG at about $55 per share, making it easier for whole-share ownership than on the NASDAQ. It is a Canadian Depositary Receipt (CDR) structurally engineered to provide fractional stock ownership and automatic currency hedging directly on the ticker level.
The important point isn’t that investors should own FFH or GOOG. Rather, fractional shares remove the share-price barrier, allowing investors to focus on the businesses and investment thesis instead of asking whether they can afford one entire share.
Start small, build consistently
Fractional shares don’t eliminate investment risk. A fraction of a stock can lose value just as quickly as a whole share. What they do eliminate is an unnecessary barrier to getting started.
For Canadian beginners, that can be powerful. Starting with $25, $50 or $100 can help develop investing habits while keeping individual purchases manageable. Over time, consistent contributions, diversification and patience can matter far more than whether your first purchase was one share — or one-tenth of a share.
The goal isn’t to buy stocks simply because you can afford a fraction. It’s to use fractional shares as a tool for putting your investment plan into action sooner.
