Skip to main content
Don’t miss our
best deal ever
offer ends july 23
save over $160
Sale ends in
$6
for
6 months
Don’t miss our
best deal ever
$6
for 6 months
save over $160
// //

Wealthsimple Trade is now offering the ability to buy fractional shares in certain Canadian and U.S. companies, putting some of the market’s most high-priced stocks within reach of newer investors.

Clients of the commission-free trading platform are now able to buy as little as one dollar’s worth of a stock in nine U.S and four Canadian companies, including high-flying Shopify Inc., the most valuable publicly traded Canadian company by market capitalization.

It marks the first time a broker has offered fractional shares in both Canadian and U.S. firms, according to the company.

Story continues below advertisement

In addition to Shopify, investors can now more easily buy into Royal Bank of Canada, Toronto-Dominion Bank, Canadian National Railway Co., Apple Inc., Amazon.com, Inc., Google LLC, Microsoft Corp., Netflix Inc., Tesla Inc., Airbnb, Inc., Coinbase Global Inc. and Nvidia Corp. The list is expected to expand in the future.

Some of these stocks are out of reach for many younger investors. A single share of Amazon, for instance, is currently worth about US$3,700; Shopify is trading just below $1,900.

“Fractional shares are one of the top features requested by our clients to give them greater access to invest in their favourite companies and sectors, and we look forward to expanding the feature,” said Robyn Ross, Wealthsimple’s chief core operations officer and head of trade, in a statement.

Dividends, if a stock pays them, will still be paid out – based on the client’s fractional holding.

The feature builds on the technology developed by discount broker ShareOwner Investments Inc., which Wealthsimple acquired in 2015. ShareOwner was Canada’s first automated investment manager and offered fractional shares.

Wealthsimple launched fractional trading as part of a test program last week. Among the randomly selected pilot users was 18-year-old Montreal resident Victor Leblanc, who said he used the feature to buy $15 worth of Tesla stock – about 0.44 per cent of a share worth about US$670 at the time.

“I really love it. I think it’s great because if you don’t have access to fractional shares, Canadians are at a disadvantage compared to the United States,” said Mr. Leblanc, who has been teaching himself about investing and diversification since he was 15.

Story continues below advertisement

“I think it makes it more risky if you don’t use fractional shares because you could have 80 per cent of your portfolio in Tesla, for instance. This actually makes investing safer,” he said.

The feature may be welcomed by self-directed investors, many of whom are funnelling their pandemic savings into stocks for the first time. Investors opened more than 2.3 million DIY accounts last year, up from about 850,000 new accounts the previous year, according to Investor Economics, a financial services research firm.

Meanwhile, one in 10 Canadians plans to leave their financial adviser and manage their own portfolio this year, and another 4.7 million Canadians are seriously considering doing so, according to global comparison site Finder.com. Young people, aged 18 to 24, were most likely to strike out on their own, the research found.

In addition to making it easier to diversify a portfolio on a budget, fractional shares can help investors get the most out of available cash, according to Shi Li, an associate professor of finance at the Sprott School of Business at Carleton University. Instead of having to save enough money for a whole share in a low-interest chequing account, he said, investors can purchase shares right away, taking advantage of price growth.

Others caution that, as trading becomes more accessible, it becomes more important to educate new investors on the risks of the stock market. While buying fractional shares doesn’t necessarily make investing riskier, it could encourage investors to make shortsighted trades, according to Pauline M. Shum Nolan, a professor of finance at the Schulich School of Business and the founder of finance analytics company Wealthscope.

“We saw what happened in January when Reddit users put a couple hundred dollars into companies like Gamestop or AMC,” Prof. Shum Nolan said. “It creates an environment where investment becomes more like gambling. We don’t want to turn it into a casino. Investing shouldn’t be a game.”

Story continues below advertisement

Wealthsimple’s Ms. Ross said that while the company’s approach to creating wealth over the long term remains the same, it also thinks there should be a place for people to responsibly buy and trade stocks as part of a healthy financial plan.

“We value our clients’ feedback, experimentation and iteration over the perfect final solution – and we’re nowhere near done,” she said. “We have a really exciting roadmap ahead.”

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies