Skip to content
Can You Buy Fractional Shares of VTI?

Can You Buy Fractional Shares of VTI?

In recent years, investing in fractional shares has become more popular. More brokerage account platforms have started to allow buying of fractional shares. You can buy fractional shares of stocks, mutual funds, and ETFs, but you probably already knew that. 

You can only buy fractional shares of VTI from some brokerage platforms. However, with Vanguard you can reinvest your ETF dividends that come from a split stock back into the stock as fractional shares. 

VTI is a good ETF to invest in due to its diversification, however, VTI (Vanguard Total Stock Market Index Fund ETF) is only available through Vanguard as full shares.

TIP: Keep track of all your investments with Personal Capital. I use this amazing tool to aggregate all investments in one place and make sure I'm on track to financial freedom. Oh, and did I mention it's free? Try it out here (link to Personal Capital).

Which brokerages allow you to buy fractional shares of ETFs?

You cannot buy fractional shares of ETFs, like VTI, at all brokerages. For example, at Vanguard you can only buy shares of mutual funds, such as VTSAX. To buy fractional shares of an ETF like VTI you will need to go to another brokerage.

Some Brokerages that allow for ETFs to be purchased as fractional shares are:

Fidelity offers a good choice of ETFs as fractional shares. VTI is one ETF that you can purchase through the trading platform. Fidelity also offers fractional share purchases on stocks.

M1 allows the buying of fractional shares on ETFs, stocks and mutual funds.

With Robinhood, you can buy a fractional share of ETFs and stocks worth more than $1 per share.

VTI and other ETFs are eligible for fractional share purchases on the Interactive Brokers trading platform. 

FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).

Why buy fractional shares?

There are a few reasons why investors choose to invest in fractional shares. Reasons include being able to invest in stocks you couldn’t otherwise afford and diversifying your portfolio. 

To invest in stocks you otherwise can’t afford

Buying fractional shares is one way to start investing in stocks, ETFs and mutual funds that you couldn’t otherwise afford. For example, if you only had $100 to invest, but wanted to buy VTI, you could instead purchase a fraction of a share of the ETF for $100. 

To diversify your portfolio

One way to diversify your portfolio is to buy fractional shares of an ETF like VTI so that you can have access to a number of stocks without having to buy an entire share. 

NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).

Buying fractional shares of VTI

Buying fractional shares of VTI will get you into a good amount of stocks, making it a wise investment for purchasing fractional shares. As mentioned, however, you cannot do this with Vanguard, so you will need to go to a brokerage that allows for the buying fractional shares of VTI.

Reinvesting dividends to buy fractional shares.

With Vanguard, you can reinvest your dividends to buy fractional shares. As discussed in a previous post, there are ways to invest in fractional shares on brokerage platforms that do not allow the outright purchase of fractional shares. This involves reinvesting your dividends which you earn from stock splits back into the stock, regardless of whether you have enough to buy a full share or not. This is one exception many brokerage platforms have when it comes to holding fractional shares of an ETF. 

When a company splits a stock, you end up with fractional shares. You can reinvest those dividends back into the stock on the same date your dividends are paid via some brokerage’s Dividend ReInvestment Plan (DRIP). For more information on DRIP and stock splits, see my recent post, here.

Brokerages that allow reinvesting dividends for fractional shares

Along with those that allow purchasing fractional shares of ETFs, (with the exception of Interactive Brokers) the following trading platforms allow reinvesting your dividends of fractional shares: 

Why don’t some brokers allow you to buy fractional shares of VTI?

Due to the fact that fractional shares are relatively new, as is the technology that they are based on, some brokerages are hesitant to allow for the trading of fractional shares. It basically comes down to the fact that algorithms that track ownership of the pieces of each share. This adds more work for the brokerage platform. 

More brokers are starting to offer purchases of fractional shares in order to be more competitive. However, when it comes down to it, the process of managing fractional shares takes a good amount of more work and thereby costs more too. Fractional share trading will likely be seen on more brokerage platform as it becomes more popular with novice investors. 

FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!

Should I buy fractional shares of VTI?

VTI is a good long-term investment. If you are just getting started in the market and have a very minimal amount, say only $100 to spend, then investing in VTI, even as a fractional share is a good option. Of course, you will have to do this on a platform other than Vanguard. 

VTI is an ETF that offers a good amount of diversification, so investing what you have now in the stock may be a solid option for your future. You can always top up your investment with more fractional shares by putting in a specific amount of money each week, or month into the fund. 

ALSO: Small-cap equities can add a lot of upside to a portfolio while mitigating risks. Recently, I've discovered Mainvest's investment platform which makes it easy to invest in small and local businesses with returns of 10-25%. Take a look here (link to Mainvest).

The bottom line

Although you cannot buy fractional shares of VTI on Vanguard, there are other trading platforms that allow for you to purchase it this way. You can also always reinvest your dividends that come from stock splits as fractional shares on most brokerage platforms. 


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!

2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.

5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply

Your email address will not be published.