Yes, Freetrade offers fractional share trading, but only for US shares. This feature allows investors to buy a portion of a share rather than an entire one, making high-priced stocks more accessible.
Understanding Fractional Shares on Freetrade
Freetrade provides access to fractional shares exclusively for equities listed on US exchanges. This means you can invest in a fraction of companies like Apple, Amazon, or Tesla, even if you don't have enough capital to purchase a full share.
- Accessibility: Fractional shares lower the barrier to entry for expensive stocks.
- Diversification: Investors can spread their capital across a wider range of companies, even with a smaller budget.
- Cost-Efficiency: You can invest exact amounts of money, rather than being limited by the price of a full share.
Account Types Supporting Fractional Shares
When trading fractional shares on Freetrade, it's crucial to understand which account types support this feature:
- General Investment Account (GIA): Fractional shares can be held within a Freetrade GIA. This account type is flexible but does not offer tax benefits.
- Self-Invested Personal Pension (SIPP): You can also hold fractional US shares within a Freetrade SIPP, allowing you to invest for retirement with potential tax advantages.
- Individual Savings Account (ISA): Important: Fractional shares are not available to be held within a Freetrade ISA. If you wish to invest in fractional shares, you will need to use a GIA or SIPP.
Here's a quick overview:
| Account Type | Fractional Shares Available | Key Feature |
|---|---|---|
| General Investment Account | Yes (US shares only) | Flexible, no tax wrapper |
| Self-Invested Personal Pension | Yes (US shares only) | Invest for retirement, potential tax relief |
| Stocks & Shares ISA | No | Tax-efficient investing, but excludes fractional shares |
How to Buy Fractional Shares on Freetrade
Purchasing fractional shares on Freetrade is generally straightforward:
- Fund your Freetrade account: Ensure you have sufficient funds in your GIA or SIPP.
- Search for US shares: Browse or search for the specific US stock you wish to invest in.
- Choose your investment amount: Instead of specifying the number of shares, you can often input the exact monetary amount you want to invest. Freetrade will then allocate the corresponding fraction of a share.
- Confirm your order: Review your order details and confirm the purchase.
Note: Access to different order types on Freetrade may vary depending on the specific plan you choose (e.g., Freetrade Standard, Plus).
Important Considerations for Fractional Trading
- US Shares Only: Remember the strict limitation to US-listed equities. UK or European shares are not available for fractional trading on Freetrade.
- Account Type Restrictions: As highlighted, avoid trying to purchase fractional shares within an ISA on Freetrade, as they are not supported.
- Liquidity: While fractional shares make investing more accessible, they are still tied to the underlying full share's liquidity.
By understanding these points, you can effectively utilize Freetrade's fractional share offering to build a diversified investment portfolio. For more detailed information on Freetrade's offerings, you can visit their official website Freetrade.io.
