M1 Finance

Webull: Trading Fractional Shares of Stock


2020: Does Webull offer buying of partial (fractional) shares of high value stocks such as Berkshire Hathaway (BRK.A), Amazon (AMZN), Google (GOOG), or Facebook (FB)?



Buying Fractional Shares of Stock on Webull


You cannot directly buy a fractional share of stock (such as Berkshire Hathaway or Google) on Webull or any of its traditional competitors such as TD Ameritrade, Etrade, or Vanguard. However, you can invest in partial shares of stocks by using a $0-commission brokerage firm called M1 Finance (read review).


Open M1 Finance Account


Pay $0 broker commissions or fees when you open account at M1 Finance.

Open M1 Finance Account


Why consider Broker-Assisted Trading?


Although it seems counterintuitive for independent online investors to spend up to four times as much to place a trade with a broker compared to non-brokered online trades, there may be times when personal assistance is worth the extra commission.

The most obvious reason is if a trader doesn't have access to a computer. Even the most secure and reliable internet service can be disrupted by natural disasters that cause power outages. If that outage coincides with a big move in a stock or ETF that a trader owns or has been monitoring for a buy or sell signal, a broker-assisted trade might save the investor many times the amount of the broker's commission.

Computers also seem to crash at the worst possible time for a trader. When faced with the proverbial "blue screen of death" that occurs when a computer suddenly dies right in the middle of placing a time-sensitive trade, a quick phone call to the trader's broker is usually preferable to missing the trade completely and losing a great deal more money than the extra commission costs.

Travelling is another reason to consider a broker-assisted trade. Although internet access and Wi-Fi coverage seem ubiquitous, there are still many areas of the country that either don't have wireless service or have archaic dial-up or DSL connections. Even if service is available, it may be too slow or unreliable to allow a trader to place a trade in a timely manner.

A fourth reason may be if an investor is unfamiliar with the asset class. Many traders exclusively buy and sell stocks, ETFs, and/or mutual funds. However, sometimes trading an option on a particular stock might be a better alternative than buying the stock itself. One example is when a stock has hit a new high and an investor is tempted to sell it to lock in profits, but doesn't want to miss more potential gains in case the stock keeps going higher. Options strategies such as selling an out-of-the-money (OTM) covered call or buying an OTM put on the stock may be a way to improve an investor's return on that stock without needing to sell the stock outright.


More complicated options strategies such as spreads, butterflies, and condors can often generate extra income when markets or individual stocks are stagnant but the investor desires to improve total return on a position. The risk is great for newcomers to options trading to make extremely expensive mistakes when placing online orders. Something as innocuous as inadvertently placing a limit debit order instead of a limit credit order may be disastrous. Such a mistake could cost a trader hundreds or thousands of dollars. All of a sudden, paying a few extra dollars to a live broker seems like cheap insurance to guarantee a proper options trade execution.

Good online brokers will have educational materials about all the products they offer, especially options, but there's no substitute for experience when trading options.


Summary


Broker-assisted trading may be an infrequent requirement for most experienced online investors, but beginner investors especially should understand that overpaying for broker assistance even occasionally might negate any commission savings generated by using an online broker in the first place. Investors should evaluate their experience and education when choosing an online broker and factor in the costs of the likelihood of them needing broker assistance with trades.