This article has been reviewed by Sumeet Sinha, MBA (Emory University Goizueta Business School). Should you have any inquiries, please do not hesitate to contact at sumeet@finlightened.com.
Fractional Shares on Robinhood
Robinhood recently introduced a new feature that allows investors to buy fractional shares. This is important because it allows more and more people to invest in companies whose share prices are very high, Amazon, for example, trades at more than $2400 as of June 2, 2020. If an investor has just $100 to invest every month, without the ability to buy partial shares, they would have to wait for 24 months to buy their first AMZN share in a traditional manner. But, with the partial share feature, investors can invest little amounts into high market price stocks. Keep reading till the end to see how I could finally invest in Berkshire Hathaway Class A stock (BRK.A) trading at $345,000 per share!
How to buy fractional shares on Robinhood? (Step by Step Guide)
You can invest as little as $1 using Robinhood’s fractional share buying feature. This is a fairly simple process. Let’s see step by step how to buy partial shares on Robinhood by investing a fixed dollar amount. If you’re new to this feature.
Demo: How to invest $20 in Amazon stock on Robinhood using the fractional share investing feature.
Step 1: Open the Robinhood app, and search for the stock you want to invest in (AMZN for example)
Open the Robinhood app, and search for the stock you want to invest in (AMZN for example)
Step 2: Choose the desired stock, make sure the ticker symbol is correct. You’d see the most recent price and some other information about the stock. Click on ‘Trade’ button at the bottom. Subsequently, choose ‘Buy’.
Choose the desired stock, make sure the ticker symbol is correct. You’d see the most recent price and some other information about the stock. Click on ‘Trade’ button at the bottom.
Subsequently, choose ‘Buy’.
Step 3: After choosing ‘Buy’ you should see a screen like shown below. On the top right hand side, select the text (here it reads ‘Dollars’, but it can be different on your device. If you already see ‘Dollars’ you can skip step 4).
After choosing ‘Buy’ you should see a screen like shown below. On the top right hand side, select the text (here it reads ‘Dollars’, but it can be different on your device. If you already see ‘Dollars’ you can skip step 4).
Step 4: You should see multiple buying options. Choose ‘Buy in Dollars’.
You should see multiple buying options. Choose ‘Buy in Dollars’.
Step 5: Enter the dollar amount you want to invest, say $20. Click on ‘Review’.
Enter the dollar amount you want to invest, say $20. Click on ‘Review’.
Step 6: Swipe up to submit the order. Done!
Swipe up to submit the order. Done!
How to buy fractional shares on Robinhood: Video Guide
How to buy partial stock on Robinhood: SlideShare Guide
Hope you now know how to buy partial shares on Robinhood! Ready to get started by investing $20 in stocks?
M1 finance is another app that allows investors to buy fractional shares. Learn more about creating a pie on M1 finance and investing.
Invest in Berkshire Hathaway using the partial stock feature on Robinhood
Warren Buffet’s Berkshire Hathaway offers two classes of stocks to investors – Class A stock (BRK.A) and Class B stock (BRK.B).
When I first started investing, I wanted to invested in the Buffet stock – Berkshire Hathaway. Between the two class of stocks (A and B), I could afford only class B shares. Reason – I simply couldn’t afford one share of class A stock. As of November 2020, one class A share trades at $350,000.
How to buy partial shares of Berkshire Hathaway (BRK.A) on Robinhood?
Step 1: Search for the Berkshire Hathaway stock Class A shares (ticker symbol: BRK.A). Click on the trade button on the bottom right.
Search for the Berkshire Hathaway stock Class A shares (ticker symbol: BRK.A). Click on the trade button on the bottom right.
Step 2: On the top right hand side, make sure the selection is ‘Dollars’. Another way to confirm is the small dollar sign in the center of the screen, right before the number.
On the top right hand side, make sure the selection is ‘Dollars’. Another way to confirm is the small dollar sign in the center of the screen, right before the number.
Step 3: Enter the desired amount you want to invest in the Berkshire Hathaway stock. Let’s say you want to invest $1000. Enter $1,000 and hit review.
Enter the desired amount you want to invest in the Berkshire Hathaway stock. Let’s say you want to invest $1000. Enter $1,000 and hit review.
Step 4: As you can see, Robinhood will tell you how many shares you will be able to buy for the $1000 investment – in this case 0.002853 shares (which is $1,000 / $350,395). Once ready, swipe up to submit the order to buy $1000 worth of Berkshire Hathaway Class A stock. Done!
As you can see, Robinhood will tell you how many shares you will be able to buy for the $1000 investment – in this case 0.002853 shares (which is $1,000 / $350,395). Once ready, swipe up to submit the order to buy $1000 worth of Berkshire Hathaway Class A stock. Done!
Congratulations, you are now a Berkshire Hathaway Class A (partial) shareholder!
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