By Quantinvestor in fractional — 16 Jul 2025

Getting Started with Fractional Shares: Own Amazon for $5

Introduction: Investing Has Changed Forever

You no longer need hundreds or thousands of dollars to start investing in the world’s biggest companies. Thanks to fractional shares you can buy a sliver of a high-priced stock like Amazon (AMZN) for as little as $5 and still enjoy the same percentage gains—and losses—as someone who owns a full share. This guide will explain what fractional shares are, why they matter, and how you can own a piece of Amazon today without draining your bank account.

What Are Fractional Shares?

A fractional share is exactly what it sounds like: a fraction of a whole share of stock. Instead of purchasing a full share that might cost hundreds or even thousands of dollars, investors can buy one-tenth, one-hundredth, or any other divisible portion. Many modern brokerages now slice popular stocks into bite-size pieces, making the stock market more accessible, inclusive, and aligned with the budget of everyday investors.

Brokerages keep track of fractional shares digitally in your account. You hold the same economic rights—price appreciation, dividends, and voting (if the broker allows it)—in proportion to the fraction you own. When Amazon’s price moves up 1 percent, the value of your $5 slice also rises by 1 percent. It’s a simple, elegant way to democratize investing.

Why Buy Fractional Shares of Amazon?

Amazon is one of the largest and most influential companies in the world, but its stock price often trades in the triple-digit range. For new investors, that high entry price can be intimidating. Fractional shares remove that barrier. Here are three compelling reasons to start with Amazon:

First, diversification. By allocating just a small amount, you can blend Amazon into a broader portfolio without overweighting a single position. Second, growth potential. Amazon’s e-commerce, cloud computing, and advertising segments continue to expand, offering long-term upside. Third, learning opportunity. Watching how a leading tech giant responds to market forces is an excellent real-time education in investing.

Behind the scenes, the process is fairly straightforward. When you place a dollar-based order—for example, “Buy $5 of AMZN”—your broker calculates what fraction of a share that dollar amount represents at the moment your trade is executed. If Amazon is trading at $150 per share, you receive 0.0333 of a share. The brokerage’s clearing firm aggregates orders and holds whole shares in custody, while each customer owns their corresponding fraction on the books.

Trades usually settle on the standard two-business-day T+2 cycle, just like full shares. You can add to, reduce, or sell your fractional portion at any time during normal trading hours. Some brokers even offer recurring purchases, letting you automate small, regular investments that harness the power of dollar-cost averaging.

Step-by-Step Guide to Buying $5 of Amazon

1. Choose a Brokerage That Supports Fractional Shares

Not every platform offers fractional trading, so confirm the feature before opening an account. Popular options include Fidelity, Charles Schwab, Robinhood, SoFi, and Cash App.

2. Open and Fund Your Account

Complete the standard account application, verify your identity, and link a bank account. Most brokers let you start with as little as $1.

3. Search for Amazon (Ticker Symbol: AMZN)

Navigate to Amazon’s quote page. You will see the current market price, performance charts, and analyst data.

4. Select “Buy in Dollars”

Choose the dollar-based order type rather than shares. Enter $5 as the amount you wish to invest.

5. Review and Place Your Order

Double-check the order details and estimated fraction you will receive. Submit the order and wait for confirmation. Congratulations—you now own a piece of Amazon!

Fees, Taxes, and Risks

Many brokers advertise commission-free trades, but small regulatory fees may still apply. Always read the fine print. For taxes, fractional shares are treated the same as whole shares: any dividends are taxable income, and selling for a profit triggers capital gains tax. Keep accurate records or sync your account with tax software.

Risks stem from the underlying stock itself. Amazon’s price can move sharply due to earnings surprises, regulatory actions, or broad market volatility. Fractional shares do not mitigate market risk; they simply reduce the dollar amount at stake. Only invest money you can afford to tie up for the long term.

Tips for Success with Fractional Shares

1. Embrace diversification: Spread small amounts across different sectors to reduce volatility.

2. Think long term: Fractional investing shines when you hold for years, not days.

3. Automate contributions: Setting monthly or bi-weekly purchases helps smooth out market fluctuations.

4. Reinvest dividends: Many brokers allow automatic dividend reinvestment (DRIP), compounding your returns over time.

5. Stay informed: Follow Amazon’s quarterly earnings, product launches, and industry trends to understand your investment.

Frequently Asked Questions

Can I receive dividends on fractional shares?

Yes. Dividends are paid proportionally. If Amazon declares a $1.00 dividend and you own 0.0333 shares, you will receive roughly $0.033.

Do fractional shares come with voting rights?

This depends on your broker. Some round your fraction up to a whole share for voting, while others pool ballots. Check your platform’s policy.

Can I transfer fractional shares to another brokerage?

Usually not. In most cases, fractional shares must be sold and the cash transferred. Whole shares can transfer via ACATS.

What happens during a stock split?

Your fraction adjusts automatically. If Amazon executes a 2-for-1 split, your 0.0333 share becomes 0.0666, and the price per share is halved, leaving your total value unchanged.

Final Thoughts: Start Small, Think Big

Fractional shares tear down the walls that once kept everyday people out of the stock market. For the cost of a fancy latte you can claim a stake in Amazon, ride the company’s growth, and learn valuable investing habits along the way. Whether you dream of building long-term wealth, diversifying your portfolio, or simply exploring the market, getting started with a $5 slice of Amazon is an empowering first step. Open an account, set your budget, and begin your journey toward financial freedom today.