ShareBuilder Review – Low Cost Automatic Investing

Of all the online discount brokers that we have reviewed, ShareBuilder is the most unique.  Acquired by ING Direct in December of 2007, ShareBuilder is not your run of the mill online discount broker.  Without the use of brokers or stock professionals in-house, ShareBuilder has still become one of the best options for consumers within the online space.  One of the big reasons, as you’ll see below, is its pricing structure for investors who want to employ dollar cost averaging.

ShareBuilder Pricing and Fees

ShareBuilder’s claim to fame is low cost automatic investing. For just $4 a trade, you can make automatic investments in a stock or fund every month. Through ShareBuilder’s website, you set up a monthly investment in a stock that will automatically occur at the same time each month. Because ShareBuilder allows you to buy partial shares of a stock, you don’t need to worry about whether the amount you are investing each month will be enough to buy whole shares. While ShareBuilder does offer real-time trades for a respectable $9.95 per trade, its automatic investing is where ShareBuilder really stands out.

When you sign-up with ShareBuilder, you have three different account types to choose from. the account type you choose will determine how much you will pay for Automatic Investing. The three different types of accounts that you can sign up for are:

  • Basic Plan: In the basic plan, there is no monthly account fee and all automatic investments are $4.
  • Standard Plan: In the standard plan, a monthly service charge of $12 applies and this entitles you to six free automatic investments.  In addition to the six free investments, any additional investments cost $2 each.
  • Advantage Plan: In the advantage plan, a monthly service charge of $20 applies and this entitles you 20 free automatic investments.  In addition to the 20 free investments, any additional investments cost $1 each.

As you can see, ShareBuilder has a variety of automatic investment options to accommodate both frequent and infrequent traders.  Free and discounted trades do not rollover from month to month so make sure you use them when you have them.

In addition to their discounted stock trades, ShareBuilder allows for the purchase of 70 no-load mutual funds without a transaction fee, including the ING Mutual Funds.  ShareBuilder has another group of 100+ no-load mutual funds that cost $19.95 to trade. Generally, it is more cost effective to buy mutual funds directly from the fund company if you can, but if you trade infrequently, the occasional cost of trading may be worth keeping all of your investments in one place.

ShareBuilder Customer Service

The main draw to ShareBuilder is its low cost automatic investing, so you won’t get the full service features you’d find with other brokers. From Monday-Friday, customer service representatives are available for extended hours via telephone, but the online broker does not offer a live chat feature.  Contacting ShareBuilder via email or their online form is another option, however, it can take a full two business days before a response is received.  Brokers such as E*Trade, Scottrade and OptionsXpress offer a much broader range of customer service hours and options. So if you need help in making trades often, ShareBuilder is not the broker for you.

ShareBuilder Technology and Education

ShareBuilder’s website is designed for those who may not be as familiar with investing as others. It’s very easy to open and fund an account. And setting up an automatic investment in a stock takes just a few seconds. In some ways it benefits from the technology and user-interface available from ING Direct. However, for hardcore traders, ShareBuilder is not the answer. It’s tools and interface don’t match those offered by discount brokers who cater to active traders.

ShareBuilder Intangibles

So outside of pricing, what else does ShareBuilder have to offer?  Well some of the other draws comes from:

  • No account balance minimum requirements
  • No fee IRA’s and Educational Savings Accounts
  • No inactivity fees
  • Money market cash accounts that allow the funds that you do not use for trading to gain interest at Money Market rates
  • Tax management software

I’ve used ShareBuilder for about a year to invest in shares of Berkshire Hathaway. For me, ShareBuilder was the best option because it allowed for low cost automatic investing and purchasing partial shares. That’s really where ShareBuilder stands out. If you are not looking for automatic investing, however, ShareBuilder in my opinion is probably not the best option.

For more information or to open an account, visit ShareBuilder.

Topics: Investing

3 Responses to “ShareBuilder Review – Low Cost Automatic Investing”

  1. I love the partial shares, automatic dividend re-investment, and that it’s connected to ING. Can’t wait till my BRK-B partial share turns into full shares when they re-org. Shouldn’t make a difference but it would be nice to see full shares in my account.

    I find the automatic investing to be a bit cumbersome at times though. You have to make sure your dates are set correctly as you only invest on Tuesdays.

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