Webull Fractional Shares Review — Your Favorite Stocks for As Little As $5
Webull is a popular trading app that until recently was missing one thing. It wouldn’t let its users invest in fractional shares, but as you’ll see in this Webull fractional shares review, that has changed!
Fractional shares are one of the best ways to put every dollar to work. They let you invest in stocks you might not otherwise be able to afford.
Now that Webull offers fractional share investing, it’s time to take another look at the investing app. In this new review, you’ll learn about fractional trading and how you can start doing it in your Webull account.
Webull is a self-directed investment app. Webull has a zero-commission structure, fractional shares, attractive sign-up incentives, robust trading tools, and sleek user-friendly design.
- Affordable trading
- Easy to access
- Dividends for fractional shares
- Paper trading
- No fractional share transfers
- Too complex for new investors
- Market order only
- You can’t enter dollar amounts for fractional orders
What Are Fractional Shares?
First things first. Let’s define fractional shares.
A fractional share is a portion of a stock that’s less than one full share. That means you can spend less than the price of one share.
This comes in super-handy when you want to buy a stock like, say, Chipotle, which currently costs more than $1,800 per share. Who’s got the money for that?
But if you wanted to buy just $10 worth of Chipotle, you could do so with a fractional share. That would give you a way to profit from your favorite burrito chain for the price of an entree and drink.
Fractional Ownership Pros and Cons
Now that you have a better idea of what fractional shares are, let’s take a look at the pros and cons of buying slivers of stocks.
h3 class=”h3″> Pros
Access high-growth stocks
Putting money into fractional shares lets you buy into high-quality stocks that cost a lot of money.
To illustrate, Amazon is currently trading at $3,478.05 per share — a pretty steep price for the average investor. But if you have $5 or $10 laying around and a brokerage account that supports fractional trading, it’s possible to buy a fraction of an Amazon share.
Invest more money
If you’re like most people, you probably have some spare change sitting around in your brokerage account. For example, you might have $100 to invest, decide to buy four stocks that cost $23.50 a share, and have $6 left.
Instead of letting the money sit in your brokerage’s money market fund, you can use the money to buy a fractional share and possibly achieve higher growth (assuming you make a wise investment, that is).
You might not receive a dividend
Some brokers will keep your dividend if you buy a small fraction of a share. Be sure to check the fine print with your broker before buying anything so you don’t wind up missing out on potential payments.
You could lose money
As a disclaimer, the stock market is volatile. There’s no guarantee that any stock will increase in value after investing in it. On the contrary, it could plummet in value, causing you to lose your money.
Always research a stock before investing, using technical indicators to determine where a company may be heading. As a general rule, doing your due diligence and investing in a company you believe in is way better than picking stocks on a whim.
Your broker might not offer fractional trading
Not all brokers allow customers to trade fractional shares. If you’re interested in fractional shares, check with your broker to make sure they provide this type of service. Otherwise, you might have to open a new account with a different provider.
Looking for a broker that sells fractional shares? Webull could be a good choice. It’s one of the more popular brokers that offer fractional shares.
Read on in our Webull review to determine whether it makes sense to open an account on the platform.
What Is Webull?
Webull is a self-directed investment app.
The company is a member of the Financial Industry Regulatory Authority (FINRA) and is registered with the Securities Exchange Commission (SEC).
Webull is also a member of the Securities Investor Protection Corp. (SIPC), NASDAQ, the New York Stock Exchange (NYSE), and Cboe EDGX Inc. (CBOE EDGX).
What does Webull offer?
Here are some of the top features Webull offers.
Taxable brokerage accounts and IRAs
Webull provides taxable brokerage accounts for short- to medium-term trading.
In addition, the company offers retirement accounts such as Roth IRAs, traditional IRAs, and rollover IRAs. According to Webull, more IRA programs are in development, so be sure to check back and see what they’re planning.
Webull lets you trade stocks, options, and exchange-traded funds (ETFs) in taxable accounts and IRAs. However, you can’t trade spreads in Webull’s IRA accounts.
No commissions and no management fees
Webull offers zero-commission trading for fractional shares. You can invest with as little as $5 without worrying about a company taking a slice of your cash.
Additionally, the company doesn’t have any account minimums, minimum deposits, inactivity fees, or account management fees.
As my long-time readers know, I’m not a big fan of fees. To me, Webull is rather appealing in this area.
Webull provides a pretty diverse selection of investment opportunities. With that in mind, here’s a breakdown of the various trades that you can make within the Webull app.
- U.S. market stocks: Access thousands of stocks from U.S. companies. If you want to buy individual shares of publicly traded corporations, Webull can make it happen.
- Cryptocurrency: Looking to dip your toes in crypto trading? Webull allows you to invest in digital currencies, like Ethereum, Bitcoin, Litecoin, and Bitcoin Cash.
- Exchange-traded funds (ETFs): ETFs provide broad market exposure, letting you buy a stake in a variety of companies through a single equity. They are typically more affordable than mutual funds, with lower management fees.
- Options: You can also do options trading through Webull. It’s commission-free and without any contract fees, assignment fees, or exercise fees.
Webull Fractional Shares Overview
Now, let’s get back to why you’re here.
Webull is an excellent app for investing in fractional shares. Unlike some of its competitors, the site offers powerful tools for analyzing market data.
Mobile app and desktop service
In addition, you can access Webull over any desktop through its web app.
How to invest in fractional shares of stock through Webull
Webull makes it very easy to invest in fractional shares. Here’s a breakdown of how it works.
1. Open an account
To start, head over to Webull and open a free account. You have to be at least 18 years old, have a valid Social Security number, and have a U.S. address. The company also asks for a government ID card for extra security.
2. Get free stocks
Webull gives new users one share of free stock after opening an account. You don’t have to do anything to get it; the stock automatically appears in your account.
The stock will be completely random, with a value somewhere between $2.50 and $250.
Webull also gives you another free share by linking a bank account and adding funds to the platform. Play your cards right, and you get two free stocks just for signing up. That’s not bad at all.
3. Browse fractional shares
Buying fractional shares is no different from submitting a regular order.
All you have to do is look for a fractional share indicator at the top of the stock page when you’re thinking about which company or equity to invest in. Keep in mind that fractional shares are available for stocks and ETFs, so you aren’t confined to investing in individual companies.
4. Submit an order
When you see a stock that you like, go ahead and submit an order.
To qualify, you need to spend at least $5 on a minimum of 0.00001 shares.
5. Manage your account
After you execute a fractional trade, it’s a good idea to check in on the fund from time to time and see how it’s performing.
One thing to consider is that if you decide to experiment with day trading fractional shares in a margin trading account, you’ll need to maintain a balance of at least $25,000.
If you’re just starting your personal finance journey, I would absolutely advise against this.
Either way, if you execute more than four-day trades in five business days, the app will classify you as a pattern day trader, and you‘ll lose your margin account status.
Webull has built lots of momentum lately due to its zero-commission structure, fractional shares, attractive sign-up incentives, robust trading tools, and sleek user-friendly design.
Webull Fractional Shares Pros and Cons
Here are the pros and cons of Webull fractional shares.
Webull is one of the most affordable brokers on the market, with $0 transaction fees. If you’re looking for a cheap broker, Webull is a top choice.
Easy to access
Webull’s fractional indicator makes it very easy to see if a stock is available for fractional trading — saving you time when you’re trying to figure out what companies to invest in.
Dividends for fractional shares
Unlike other brokers, Webull pays dividends for fractional shares. The amount you receive will be proportional to the percentage of your share.
Want to brush up on your trading skills? Webull offers paper trading, which is a trading simulation tool. This can help you brush up on the basics and practice executing trades before using actual money.
No fractional share transfers
Unfortunately, Webull doesn’t accept fractional share transfers. If you have fractional shares in a third-party account, you won’t be able to access them through Webull.
Too complex for new investors
Beginner investors may have a hard time using Webull because the platform is so powerful. This is a better option if you know how to read charts and make smart trades.
Market order only
The site supports market orders for fractional shares only during standard trading hours. You can’t buy fractional shares with stop or batch orders on Webull.
You also can’t enter dollar amounts for fractional orders, which can be inconvenient.
Another minor inconvenience is that you can’t buy whole shares with fractional positions in Webull. In other words, if you want to buy 1.3 shares in a company, you’ll have to buy one share and then 0.3 shares in two separate transactions.
Fractional Trading Alternatives
A growing number of brokers now offer fractional trading in addition to Webull.
As you narrow down your choices, here are a few options to consider.
Robinhood offers a commission-free trading platform, and you get a free stock for signing up. This app lets you invest in thousands of stocks for as little as $1.
M1 Finance supports fractional shares without any trading fees or asset management fees. Customers receive access to an intuitive dashboard for tracking account performance.
Schwab is a leading broker that now offers fractional shares — also known as Schwab Stock Slices. The company offers a wide range of investing tools and insights, making it ideal for experienced investors.
Fidelity is another great broker offering fractional shares through the Stocks by the Slice program. With Fidelity, you can access $0 commissions and buy U.S. stocks and ETFs for just $1. There is also no maximum per order.
Frequently Asked Questions
Here are the most frequently asked questions about Webull fractional shares.
Can you transfer fractional shares to Webull?
Unfortunately, Webull doesn’t allow you to transfer fractional shares from another platform.
What brokerages allow fractional shares?
Some other companies that offer fractional shares include Schwab, Fidelity, Robinhood, and M1 Finance.
You may want to explore different brokers and find a platform that’s easy to navigate and use. If you don’t like a broker after starting out, you can always find a new one.
That said, just remember that you might not always be able to transfer fractional shares.
How does Webull make money?
Since Webull is a free app that doesn’t make any money on commissions, the fintech provider has to resort to some other methods to generate income.
For example, one way the company makes money is through order flow payments. Webull also charges fees for short selling, subscriptions, and margin interest.
The Bottom Line
Webull is a solid investing app that allows you to purchase partial shares and participate in traditional stock trading.
In a perfect world, you’d be able to open an account and gobble up hundreds of shares of companies like Amazon, Telsa, and Microsoft. But building a portfolio of blue-chip stocks takes time.
This is another reason why I’m a huge fan of fractional shares. They give new investors an easy way to begin building their portfolio and get a piece of high-value stocks that were previously out of reach.
Since you’ve made it this far, it’s time to start putting your money to work by gobbling up fractional shares. There’s only one question left to answer: What’s your first pick going to be?