Are you looking to liquidate your fractional shares in Fidelity? If so, you’re in the right place. In this article, we’ll provide a step-by-step guide on how to sell your fractional shares in Fidelity. We’ll also discuss some of the tax implications of selling fractional shares, and we’ll answer some frequently asked questions. Once you’ve read this article, you’ll have all the information you need to sell your fractional shares in Fidelity quickly and easily.
Fractional shares are shares of stock that represent less than one whole share. For example, if you own 0.5 shares of Apple stock, you own a fractional share. Fractional shares can be created when you buy or sell stocks that trade in odd lots (less than 100 shares). They can also be created when companies issue stock dividends or when stocks split.
There are many reasons why you might want to sell your fractional shares in Fidelity. Maybe you’re consolidating your investments or you need the money for another purpose. Whatever the reason, Fidelity makes it easy to sell your fractional shares. You can sell your fractional shares online, by phone, or by mail. However, there are a few things you should keep in mind before you sell your fractional shares. First, you’ll need to decide how you want to sell your shares. You can sell your shares at the market price, or you can set a limit order.
Understanding Fractional Shares
Fractional shares, as the name suggests, are portions of a single share of stock or ETF. They allow investors to purchase a specific dollar amount of a stock, regardless of its share price. Unlike whole shares, fractional shares can be as small as a fraction of a cent, allowing for greater flexibility and diversification in your portfolio.
Key Features and Benefits
* Access to High-Priced Stocks: Fractional shares eliminate the barrier of high stock prices, enabling you to invest in companies that were previously out of reach due to their whole-share cost. For instance, if a stock trades at $1,000 per share, you can still invest in that company with just a few dollars through fractional shares.
* Diversification: Fractional shares foster diversification by allowing you to allocate your investments across a wider range of companies, reducing your portfolio’s concentration risk. You can invest smaller amounts in multiple stocks, spreading your portfolio across different industries and asset classes.
* Dollar-Cost Averaging: Fractional shares facilitate dollar-cost averaging, a strategy where you invest a set amount of money into a stock or ETF at regular intervals. This approach reduces the impact of market volatility and helps you accumulate investments gradually over time.
* Flexibility: Fractional shares provide flexibility in terms of your investment amount and timing. You can invest whatever amount fits your budget and adjust your positions as needed without having to buy or sell whole shares.
Assessing Your Investment Options
Before liquidating your fractional shares in Fidelity, it’s crucial to assess your investment options and determine the best course of action. Here are some factors to consider:
1. Investment Goals and Risk Tolerance: Evaluate whether your investment goals and risk tolerance align with the underlying assets of your fractional shares. If they no longer align, it may be advisable to adjust your portfolio.
2. Tax Implications: Selling fractional shares can trigger capital gains or losses. Consider the potential tax implications and consult a financial advisor if necessary. For instance, if you sell shares for a profit, a portion may be subject to capital gains tax.
| Tax Brackets | Capital Gains Rate |
|---|---|
| 0% | 0% |
| 10-12% | 10% |
| 22-24% | 15% |
| 32-35% | 20% |
| 37% | 25% |
3. Market Conditions: Monitor the market conditions and assess whether it’s an opportune time to liquidate your shares. If the market is volatile, you may consider waiting for more favorable conditions to maximize your returns.
4. Holding Period: If you’ve held your fractional shares for less than a year, you may be subject to short-term capital gains tax. Holding shares for over a year can potentially qualify for more favorable long-term capital gains rates.
5. Alternative Investment Options: Explore other investment options that may better align with your objectives and risk tolerance. Consider investing in whole shares, mutual funds, or exchange-traded funds (ETFs) to diversify your portfolio.
Determining the Value of Your Fractional Shares
Fractional shares represent a small portion of a company’s stock that is less than one whole share. When you want to sell your fractional shares, it’s essential to determine their current value.
One way to determine the value of your fractional shares is to use an online fractional share calculator. These calculators can be found on websites like Fidelity, which allow you to input the number of shares you own and receive an estimated value.
Another way to determine the share value is to multiply the current market price of the stock by the number of fractional shares you own. For example, if the current market price of a stock is $100 and you own 0.25 shares, your fractional shares are worth $25 (100 x 0.25 = 25).
Here is a table that summarizes the steps involved in determining the value of your fractional shares:
| Step | Description |
|---|---|
| 1 | Determine the current market price of the stock |
| 2 | Multiply the current market price by the number of fractional shares you own |
| 3 | The result is the value of your fractional shares |
Negotiating a Sale Price
When selling fractional shares, it’s important to consider the sale price to ensure you get a fair deal. Here are some tips for negotiating a sale price:
1. Research Market Value
Before listing your fractional shares for sale, research the current market value of the underlying asset. This will give you a baseline for negotiations.
2. Set a Target Price
Set a target price that you are willing to accept for your fractional shares. Consider your initial investment, any potential profit, and the current market value.
3. Be Flexible
Be prepared to negotiate the sale price. While you may have a target price in mind, there may be some flexibility in the final price.
4. Consider Bulk Sales
If you have multiple fractional shares of the same asset, consider selling them in bulk. This may attract buyers looking for larger quantities and potentially increase your sale price.
5. Understand Market Conditions
Keep in mind that market conditions can impact the sale price of fractional shares. Factors such as supply and demand, market volatility, and economic events can influence the value of your shares.
Completing the Transaction
Once you’ve made the decision to sell your fractional shares, you’ll need to complete the transaction. Here’s a step-by-step guide on how to do it:
1. Log in to your Fidelity account
Visit Fidelity’s website and log in to your account.
2. Go to the “Accounts” tab
Once you’re logged in, click on the “Accounts” tab.
3. Select the account that holds the fractional shares
From the list of accounts, select the one that holds the fractional shares you want to sell.
4. Click on the “Trade” button
Once you’ve selected the account, click on the “Trade” button.
5. Enter the number of fractional shares you want to sell
In the “Quantity” field, enter the number of fractional shares you want to sell.
6. Select the order type
Next, you’ll need to select the order type. The following table summarizes the different order types available:
| Order Type | Description |
|---|---|
| Market Order | Sells the shares immediately at the current market price. |
| Limit Order | Sells the shares at a specified price or better. |
| Stop Order | Sells the shares when the stock price reaches a specified price. |
7. Review the details and submit the order
Once you’ve entered all of the necessary information, review the details of the order and click on the “Submit Order” button.
Transferring Ownership of the Fractional Shares
There are two primary methods for transferring ownership of fractional shares: converting them to whole shares or selling them.
Convert to Whole Shares
This option is available if you have enough fractional shares to create at least one whole share. Fidelity allows you to combine fractional shares of the same stock into whole shares through a process called “pooling.” Once you have enough fractional shares to make a whole share, you can request a stock certificate or have the whole shares deposited into your account.
Sell Fractional Shares
If you do not have enough fractional shares to create a whole share, you can sell them through Fidelity’s online platform or by calling a customer service representative. Fidelity will automatically sell the fractional shares at the current market price and credit the proceeds to your account.
Tax Considerations
When you sell fractional shares, you will incur capital gains or losses based on the difference between your purchase price and the sale price. Fractional shares are taxed in the same way as whole shares.
It’s important to note that Fidelity may charge a small fee for selling fractional shares. The fee varies depending on the type of account and the number of shares being sold.
Selling Fractional Shares at Fidelity |
Steps |
|
Log in to your Fidelity account |
Go to your “Positions” page |
|
Select the stock with the fractional shares you want to sell |
Click on “Trade” |
|
Enter the number of shares you want to sell |
Review the order details |
|
Click on “Submit Order” |
Fidelity will automatically sell the fractional shares and credit the proceeds to your account |
Tax Implications of Selling Fractional Shares
Selling fractional shares can have tax implications. The specific tax consequences will depend on factors such as the holding period of the shares, the amount of gain or loss realized, and the individual’s tax bracket.
Short-Term Capital Gains
If fractional shares are sold within one year of being purchased, any profit realized will be taxed as short-term capital gains. Short-term capital gains are taxed at the same rate as ordinary income, which can be as high as 37% for high-income earners.
Long-Term Capital Gains
If fractional shares are sold after one year of being purchased, any profit realized will be taxed as long-term capital gains. Long-term capital gains are taxed at a lower rate than short-term capital gains, with rates ranging from 0% to 20% depending on the individual’s tax bracket.
Wash Sales
The IRS implements a “wash sale” rule to prevent investors from artificially generating capital losses. If fractional shares are sold and then identical or substantially identical shares are purchased within 30 days, the loss will be disallowed for tax purposes.
Tax Loss Harvesting
Selling fractional shares at a loss can be a tax-saving strategy known as “tax loss harvesting.” By selling shares at a loss, investors can offset capital gains realized from other investments. However, it’s important to avoid wash sales when implementing this strategy.
How to Sell Fractional Shares in Fidelity
Login to your Fidelity account. Navigate to the “Accounts” tab and select the account that holds your fractional shares. Click on the “Trade” button and select “Sell” from the drop-down menu. Enter the number of fractional shares you want to sell and click “Preview Trade.” Review the order details and click “Place Trade” to complete the sale.
Pros and Cons of Selling Your Fractional Shares
Pros
Eliminating odd lot fees: Selling fractional shares can help you avoid paying odd lot fees, which are charged when you sell less than 100 shares of a stock.
Rebalancing your portfolio: Selling fractional shares allows you to adjust the weightings of specific stocks in your portfolio without having to sell the entire position.
Tax benefits: Selling fractional shares can help you optimize your tax strategy. If you have losses on other investments, selling fractional shares with gains can offset those losses, reducing your overall tax liability.
Cons
Additional transaction costs: Selling fractional shares may incur trading fees, which can eat into your profits. Fidelity’s fractional share trading fee is $0.01 per share.
Price volatility: The value of fractional shares can fluctuate significantly, especially for low-priced stocks. This volatility can make it difficult to accurately predict the price you will receive when selling.
Limited liquidity: Fractional shares are not as liquid as whole shares. There may be fewer buyers for fractional shares, which can make it difficult to sell them quickly.
Tax Implications
Selling fractional shares has tax implications. When you sell fractional shares, you will be taxed on the full value of the shares, regardless of how much you originally invested. This can result in a higher capital gains tax bill than if you were to sell whole shares.
| Tax Type | Definition |
|---|---|
| Short-term capital gains tax | Applies if you held the fractional shares for less than one year. Taxed at your ordinary income tax rate. |
| Long-term capital gains tax | Applies if you held the fractional shares for more than one year. Taxed at a lower rate than short-term capital gains. |
Additional Considerations
Before selling your fractional shares, consider the following factors:
- The size of your fractional share position.
- The trading fees associated with selling fractional shares.
- The tax implications of selling fractional shares.
- Your overall investment goals.
- Alternative strategies for rebalancing your portfolio.
Alternative Options for Managing Fractional Shares
If selling fractional shares is not feasible, investors have several alternative options to manage them effectively:
1. Rounding Up or Down
Investors can choose to round the fractional shares up or down to the nearest whole share. This option is suitable for those who do not desire fractional ownership and prefer to hold whole shares.
2. Combining with Other Fractional Shares
If you have fractional shares in different companies, you can combine them to create a whole share. This can be done by accumulating fractional shares until their total value is equivalent to one whole share.
3. Selling Call Options
Selling a call option gives the buyer the right, but not the obligation, to buy the stock at a specific price (strike price) on a specified date (expiration date). If the stock price rises above the strike price, the call option will be exercised, and the investor will sell the fractional shares at the strike price.
4. Selling Cash-Secured Puts
Selling a cash-secured put option obligates the investor to sell the stock at a specified price (strike price) on a specified date (expiration date) if the option is exercised. If the stock price falls below the strike price, the put option will be exercised, and the investor will sell the fractional shares at the strike price.
5. Buying Additional Shares
Investors can purchase additional shares in the same company to increase their overall ownership position and reduce the significance of fractional shares.
6. Holding as Odd Lots
Fractional shares can be held as odd lots, which are groups of less than 100 shares. However, odd lots may have lower liquidity and wider bid-ask spreads.
7. Using a Fractional Share Trading Platform
Some brokerages offer fractional share trading platforms that allow investors to buy and sell fractional shares directly, eliminating the need to manage them manually.
8. Transferring to a Different Brokerage
Investors can transfer their fractional shares to a brokerage that offers different options for managing them, such as automatic rounding or combining fractional shares.
9. Applying for a Special Dividend
Some companies may offer special dividends that are paid in fractional shares. Investors can apply for these dividends to increase their fractional share ownership.
10. Tax Implications
Selling fractional shares may trigger short-term or long-term capital gains or losses depending on the holding period. It is important to consult a tax advisor to understand the potential tax consequences before making any decisions.
| Tax Treatment | Holding Period |
|—|—|
| Short-Term Capital Gain/Loss | Less than 1 year |
| Long-Term Capital Gain/Loss | 1 year or more |
How To Sell My Fractional Share In Fidelity
Fidelity is a leading online brokerage that allows you to buy and sell stocks, bonds, and other investments. If you have a fractional share in Fidelity and want to sell it, you can do so by following these steps:
- Log in to your Fidelity account.
- Click on the “Accounts & Trade” tab.
- Select the account that contains the fractional share you want to sell.
- Click on the “Positions” tab.
- Find the fractional share you want to sell and click on the “Sell” button.
- Enter the number of shares you want to sell and click on the “Sell” button.
Your fractional share will be sold at the current market price and the proceeds will be credited to your account.
People Also Ask About How To Sell My Fractional Share In Fidelity
How do I know if I have fractional shares in Fidelity?
To check if you have fractional shares in Fidelity, log in to your account and click on the “Positions” tab. Fractional shares will be listed with a decimal value in the “Shares” column.
Can I sell fractional shares in Fidelity?
Yes, you can sell fractional shares in Fidelity. To do so, follow the steps outlined in the previous section.
What is the minimum number of fractional shares I can sell in Fidelity?
There is no minimum number of fractional shares you can sell in Fidelity.
Are there any fees associated with selling fractional shares in Fidelity?
There is no fee to sell fractional shares in Fidelity.
