Fractional trading, or investing with small amounts

Fractional trading in brief

Fractional – what does that mean?

Fractional trading means trading with portions of whole shares, cryptocurrencies or other securities. Unlike in conventional trading, you can now purchase a fraction of a share, and not just whole ones. The following example shows why this can be beneficial for certain investors:

Let’s assume Veronica would like to buy a share in Lindt & Sprüngli on a budget of CHF 500. She’ll soon realize she can’t afford a whole share with a budget of CHF 500 as a Lindt & Sprüngli share costs over CHF 130,000 on 15 July 2025, the day on which Veronica wants to invest in equities.

That’s where fractional trading comes into play. Various online brokers provide the opportunity to invest in small parts of a share through fractional trading. These service providers are making it easier for investors to access the market.

Where are they traded?

Fractional trading is offered via certain platforms or apps, such as “e-trading” from PostFinance. Providers sell fractions of shares from their own holdings. 

These partial purchases are known as fractional shares and can be purchased by investors. However, they are not traded directly on the stock exchange. This means platforms such as e-trading are essential for investors who want to trade in fractional shares. 

How to invest with smaller amounts

If you have thoroughly researched investing and decided you want to invest, there is very little standing in your way. To make an investment, you will need the following:

• An account with a fractional trading provider 
• An amount you are willing and able to invest
• Information about transaction costs and other fees so you’ve got an overview of your expenses
• A plan of the securities you want to invest in

You can of course withdraw the money invested at any time. But you’ve also got to accept the risk that the value of shares and currencies traded on the market may fluctuate.

Pros and cons of the trend

There are pros and cons to every market innovation – and so too with fractional trading. While investing with smaller amounts may sound appealing, it’s also worth bearing the following points in mind.

Everything’s easier now!

The main benefit of fractional trading is that it makes everything much easier for market newcomers. The following benefits stand out:

• You can invest small amounts in shares with a high unit price: the major benefit is the core element of fractional trading – investing in strong and varied shares on a small budget.
• You receive a dividend: even with fractions of a share, you receive a dividend based on the proportion of the share purchased.
• Setting up a savings plan: with fractional trading, you can regularly invest a specific amount in select securities and thereby develop a savings plan completely in line with your requirements.
• Portfolio diversification: fractional trading also makes it easier to diversify your portfolio. Whereas you’d have needed several thousand francs to achieve a certain level of diversification before, now you can invest in a wide range of equities on a limited budget. You’re no longer tied to the price of a full share. Why diversification is so important in your portfolio and how it works is explained in our article “Diversification: why is it important?”.

There are still downsides

Despite the many benefits, there’s also a downside to fractional trading. The following points are worth bearing in mind:

• limited selection of securities: not all equities are available as fractional shares. The selection is limited, depending on the platform you trade on.
• No shareholder rights: Holding partial shares does not provide any voting rights as they can’t be entered in the share register.
• Transferability: Fractional shares often can’t be transferred from one platform to another, but instead have to be sold and then re-purchased on the new platform.

Adopt a prudent approach

Fractional trading has clearly made it easier for private investors to invest small amounts. That said, while prices and rates seem tempting and other benefits also exist, you should give careful consideration to the investments you want to make. Fees in particular can quickly add up, as you have to pay them with every trade. This means if you make lots of small trades, your costs will rise.

Overall, fractional trading is a good way to invest with small amounts. It makes the stock market accessible to many people who might not otherwise invest. Whether you are just getting started or already have experience, fractional shares can help you invest your money in the companies you want.