Are there any negatives to fractional shares?

While fractional shares are great for making financial markets more accessible and easier to invest in, there are several drawbacks of investing in fractional shares.

The first thing is that new investors might be less responsible with their money. Rather than maintaining a plan to earn greater capital gains or generate dividends, novice traders may park their money in all sorts of companies without earning much money.

The other problem is that some brokerages may hold onto your dividend if you own a minuscule fraction of a share.

Moreover, fractional shares could create a mirage in a broad array of stocks. So, stocks could be inflated due to the ocean of retail traders who are now buying a fraction of a fraction of a share, which could mask a stock's poor performance.

Still, there are more positives than negatives with fractional share trading because it essentially democratizes the stock market.