The pros and cons of Sharebuilder

guy working at computer

Bill wrote the other day looking for my opinion on Sharebuilder. Sharebuilder is an online discount brokerage that encourages automatic scheduled purchases of stocks and exchange-traded funds. In plain English, the company makes it easy to start investing. Here’s what Bill had to say:

I was wondering what you thought about Sharebuilder. I am considering signing up for an Individual Retirement Account. I am not sure if Sharebuilder is a good place to start, or if I should try to get out of debt first (I have about $30,000 left and am paying it off). I have a 401K through my employer, so I have some retirement savings. I just don’t think I have enough saved for my current age, so I am looking to offset the 401K with some other investments. Anyway, do you like Sharebuilder?

I’ve been using Sharebuilder for almost two year now. I like it, but it’s not a good choice for everyone.

What Does It Cost?

Sharebuilder offers an easy, convenient way to begin investing, and is relatively inexpensive, but it is not free. It costs $4 to make a scheduled transaction. It costs $16 to make a market order (a trade that executes immediately).

While these fees are lower than those at most full-service brokers, they’re still fees. Many people would argue — and I can’t say they’re wrong — that if you want to start a Roth IRA and can afford it, you should save $1,000 or $3,000 (or whatever the minimum is) to open a no-fee account at Vanguard. Truth be told, I will eventually move my Roth IRA to Vanguard, though that’s still months (if not years) away.

Related >> What is a Roth IRA?

Getting in the Habit

Why did I choose Sharebuilder if I’m not 100% sold on them? Because they made it easy to get started.

I wanted to put $100/month into an IRA, but I didn’t have money to make a large initial investment. Sharebuilder is designed precisely for cases like mine. I created a recurring automated transaction, and I was “paying myself first” in no time. But I was paying 4% to do this — $4 for every $100 investment — a number that would make some people faint.

Eventually I cancelled my monthly program. I now make one-time lump investments of $1,000 each, which means the $4 fee doesn’t consume as much of my money. In reality, the $4 fee never bothered me. It was a small price to develop the investment habit.

Another Option

Here’s my current recommendation for someone who wishes to save for retirement, but who can only afford small amounts to start:

  • Open a high-yield savings account at Capital One 360 (or your favorite equivalent).
  • Schedule a monthly transfer to your new account. $100 is a good amount, but you might choose $25 or $250. Become accustomed to making regular investments while earning interest on the money and paying no fees.
  • In the meantime, research possible locations for your IRA. As I mentioned before, Vanguard is an excellent choice, though you might consider Fidelity or T. Rowe Price.
  • When you’ve saved enough for the minimum investment, transfer the money from ING Direct to Vanguard (or whichever place you choose).

This is a terrific way to start investing.

Related >> Which High-Yield Online Savings Account is Best?

Do What Works for You

Zecco (Now TradeKing) is another alternative to Sharebuilder. I’m not sure what automatic investment options TradeKing provides, but they do offer $0 trades. If I were beginning right now, I’d take a look at them.

Obviously, there are other choices out there. Your best bet is to do research to find the one that is right for you. If you don’t like the idea of paying investment fees, then save to open a Vanguard account. If you feel it’s important to just get started, consider Sharebuilder.

Final Notes

Bill is to be commended for striving to become debt-free. I think it’s okay to do a little retirement investing as he pursues this goal. (That’s what I did.) But remember: repaying debt is the best investment. Finally, before starting an IRA, be sure to take full advantage of the employer match on your 401k. Always take the free money!

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There are 81 comments to "The pros and cons of Sharebuilder".

  1. Andrea says 06 December 2007 at 04:06

    Another option I went with is I opened an IRA with Charles Schwab. They say there is a min. of $1000 to open an IRA, but that’s not really the case. Most mutual funds for IRA’s start at $1000, but you can set up a automatic payment monthly or however often you want and let the money sit in there earning some interest (I don’t think it’s very high, but it minimizes constantly moving the money around) until you have enough to make your first investment into a mutual fund, then typically any aditional money into that mutual fund is only $100. There are no fees to buy into a mutual fund as long as you don’t buy one and sell it within a certain period of time, I believe three mongths. But if you are saving for retirement, that’s shouldn’t be an issue for you. I think that have a nice range of selections depending on your comfort level and their customer support is AMAZING.

    • JPNWV says 21 November 2012 at 16:36

      With Sharebuilder on certain Mutual Funds(one of them is American Century) there is a initial investment of $250, then do a automatic investment of at least $25 and there is No purchase fees.

  2. Craig says 06 December 2007 at 04:56

    If you open an IRA with T. Rowe Price there is no minimum investment needed to start as long as you set up an automatic contribution plan. The only fee that I had to pay was a one time $10 account maintenance fee. There is no fee for each transaction like sharebuilder. I started with a Target Date fund because it seemed like a great way to get started and I only needed to worry about contributing to one fund initially.

    From their website:
    “The minimum initial investment to open an account is WAIVED if you choose to fund the account by Electronic Funds Transfer (EFT) with Automatic Asset Builder (AAB) service. This service allows you to systematically invest money from your bank account on the same day(s) each month. The minimum AAB contribution is $50.00 per month.”

  3. The Saving Freak says 06 December 2007 at 05:20

    I have employed the strategy you listed as “another option”. We put $200 into my ING Savings account and once we have built up enough to buy into Vanguard we will open the account. At this point the transfers for ING will stop and will be redirected to Vanguard. So far no problems and we are in the process of opening the account with Vanguard.

  4. SleepyOreo says 06 December 2007 at 05:49

    I don’t agree that paying off debt is the best investment. Granted credit card debt usually carries extremely high interest rates which would lead me to reccomend paying it off first. However, once the debt is completely irradicated you’ve dug yourself out of a hole only to be left with nothing.

    Save and pay off debt at the same time, the power of compounding will serve one better in the long run. Best to get started early with saving while paying off debt.

    • Rock RunFinance says 27 February 2014 at 10:15

      You are so wrong! Paying off high interest debt 1st does not leave you w/nothing. You are actually earning the rate of the interest of the debt. Ex: If you owe credit card bills w/20% interest rate, by paying down that bill you are earning 20%. Pay that off FIRST then invest. Of course this does not apply to low interest mortgage debt that is also tax deductible. In this case if you can earn higher returns on your investments then it makes sense to invest.

      • CFPfor33 says 15 April 2019 at 15:39

        You don’t have experience with people (other than yourself) in this situation. What happens is they pay down debt furiously without saving, have an expected expense and/or want to reward themselves and, without any saving, incur new debt to do so. SleepyOreo’s approach makes perfect sense in the real world where something other than the pure “financial” approach often works.

    • joanofark06 says 20 December 2018 at 14:38

      SleepyOreo, can you recommend somewhere, where the compounding is best? Or is every service that does compounding basically the same?

  5. Angie says 06 December 2007 at 06:08

    What about those monthly fees at Sharebuilder? They seem high for a small investor. $12 a month in addition to $4 a trade?

    • Mike says 05 February 2014 at 23:33

      Sharebuilder is $4 per automatic trade or you can pay $12 a month and you get 12 free trades plus $1 per trade after that. If you make one trade per week (4 times a month) that would be $16 for the free basic plan. If you paid the $12 a month fee, you would save $4 a month. It all depends on how frequent you like to trade. I have been with Sharebuilder for many years and love how easy it is to use. I chose them because you don’t need a minimum amount to get started.

    • Leon says 02 April 2014 at 09:30

      Sharebuilders discontinued the $12.00 Advantage program. Their automatic investing is $3.95 a transaction, $6.95 to sell.

      I don’t remember getting a memo. I found out the old fashion way, I waited for their slow chat service.

      • Les says 24 September 2014 at 11:01

        I was actually able to get the $12 plan even after the discontinued. I called them and asked them about it. They told me that they will activate it for me just one time. Once you cancel it though, you can never get it back. Now here is the kicker. If you pay the $12 a month, it doesn’t count toward your investment cost. Not sure why, but it doesn’t. A bummer if you ask me because it still cost me $12.

        Anyways if you buy more than 12 trades in a month then it is a $1 per trade to buy with the automatic plan after that each month. Also if you only put in $50 a month, this plan probably not worth it. You are already down 24% just by the cost alone. $100 a month bring it down to 12%, $200 a month brings it down to 6%, and $400 a month brings it down to 3%. Still it is a bummer that the $12 doesn’t count toward the cost of the trade according to Sharebuilder and possible the IRS. But the $1 for each additional trade after the 12 is considered a cost in trading from what I can see when I do this.

  6. KMull says 06 December 2007 at 06:17

    Bill shouldn’t worry about investing with $30,000 in debt. Unless that debt is his mortgage or low interest student loans, he needs to pay that off first. Of course, it depends on his income — $30,000 in debt is a lot to someone making $40,000/year, nothing to someone making $250,000/year.

  7. Anne Keckler says 06 December 2007 at 06:24

    As Angie says, there are monthly fees at Sharebuilder. For my stocks and some of my funds, I use Scottrade. I get immediate trades for only $7, and no monthly fees.

  8. The Travelin' Man says 06 December 2007 at 06:26

    I am a small investor and have accounts with both Sharebuilder and Zecco. For that matter, I also keep an account with TD Ameritrade that I opened before I knew any better and have just been too lazy to do anything about it.

    FOR ME, Zecco and Sharebuilder are both less expensive than the account with Ameritrade, which is why I use them. I have begun shifting my deposits from Sharebuilder to Zecco, which after a trial run, I have found easy enough (FOR ME) to use.

    Plus for Sharebuilder: The ease of the automatic investment. Sure it is $4 per trade (and there is no monthly maintenance fee, unless you choose one of their premium plans, in which case you no longer pay $4/trade), but the ease factor wins out. You can buy partial shares, which is something that I like. For me, the biggest downside isn’t the $4 on the front end, it is the $15-16 on the back end when you sell.

    Plus for Zecco: It is free. It is pretty bare bones, but the executions go through quickly on market orders. They have slightly modified their fee structure going forward into 2008, but most people will still not be affected (and they are still cheaper when they do charge a fee than most other brokers). You do have to buy in whole shares (no partials), which may make your automatic investing a little more challenging.

    Plus for Ameritrade: They seem like they give you a little better access to research, if that is important to you. But, they are easily the most expensive option for me, and I am likely planning to close that account soon.

  9. FinanceAndFat says 06 December 2007 at 06:38

    My only problem with Sharebuilder is that it is marketed directly at the small investor, but the fees are an incredibly high percentage for someone only investing $100 at a time. I fell for that about a year ago an quickly realized that the fees were killing me.

    As someone above mentioned, I use Schwab now. They offer a large list of mutual funds you can invest in with $0 fees and minimums of $100 and you can start an IRA if you set up a regular $100 transfer (or start with a $1,000 lump sum). I’m not a Schwab agent or anything, I just really like what I have found there…so far.

  10. Rob M. says 06 December 2007 at 06:53

    If Bill has $30k of consumer debt, investing would be rather counter-productive. His best investment right now would be to cut dining out/entertainment/non-essential expenses and put that towards paying off his consumer debt. Consolidating high interest consumer debt into a HELOC or transferring to a lower interest credit card would be a smart move too.

  11. Baba Ghanoush says 06 December 2007 at 07:02

    The basic plan at Sharebuilder has no monthly fees. This is the only plan you should consider, IMO. And Sharebuilder allows you to purchase partial shares, so your entire monthly contribution can go to work for you at once. But if you’re a small investor, you’re better off buying one security per month at $4, rather than a small amount of each stock in your portfolio at $4 each. This means always using one-time purchases. If you hold multiple securities, just rotate through them each month. You can still schedule a monthly transfer of money into your account. And before you diversify too much, remember that it always costs $16 per security to sell. Don’t hold so many stocks that you offset your gains with fees.

    For an IRA, make sure you know what fees you’ll pay to open, maintain and close or transfer the account. If you want to hold low-cost, broad-based index funds, you can’t beat Vanguard or Fidelity, but their brokerage services for stocks and ETFs are expensive for the small investor.

  12. Jon says 06 December 2007 at 07:11

    One of the newer things Sharebuilder offers now is the ability to execute your trade when funds are available, rather than on a fixed schedule.

    That means you can set it up to buy $1000 of XYZ Corp, and then make automatic deposits of $250 a month or whatever, and the money will sit in the money market fund earning interest (higher than ING, I believe) until you have $1000 deposited.

  13. Toni says 06 December 2007 at 07:15

    In the past, I’ve used murielsiebert.com for trading stock – although I did not use their services as described in the article. I was very very pleased with them. In particular, I didn’t get charged any account fees or inactivity fees. Eventually I closed the account because I decided that stock investing wasn’t for me but I recommend their service highly.

  14. J.D. says 06 December 2007 at 07:20

    As Baba noted, for the basic plan at Sharebuilder, there are no monthly fees. And it always costs to sell.

  15. Free From Broke says 06 December 2007 at 07:24

    You’ve pretty much outlined my plan for an IRA. We’ve been saving in ING for some time now and we will soon open up our Roth IRA’s with Vanguard. I’m also considering opening up an account with ShareBuilder to buy stocks. One plus for me in SB is they were bought by ING recently. I’ve had no problems with ING so I think I can trust SB more now.

  16. JB @ GetRichOrDieTrying says 06 December 2007 at 07:26

    Thanks JD for this info. I had opened a Roth IRA at Sharebuilder but have not funded it all yet… I think now I’m going to use your ING -> Vanguard plan… I already have a 401K at Vanguard and can’t complain.

  17. Aaron says 06 December 2007 at 07:53

    I used sharebuilder for a while and was very satisfied with it. The only reason I stopped because I qualified for 100 free trades a year through my bank.

    One thing to remember about sharebuilder is that the partial shares they let you purchase cannot be moved to another brokerage. You must sell them to get your funds out and it’s like $15 for a sell order.

    On the whole its a great service, especially if you want to trade ETFs and are looking at long term asset accumulation.

  18. Connie says 06 December 2007 at 07:56

    I love Sharebuilder. It has allowed me to begin investing and learning at the same time, using a very small amount of money every two weeks.

    It is perfectly suited to people like me who are new to the concept of investing and have little enough to invest anyway.

    When I get more serious (and more informed) about investing I may switch to Vanguard, but for now, Sharebuilder fits the bill perfectly!

    Also, The monthly fee includes either 4 or 6 trades, and you can actually save a couple of bucks in fees each month if you plan to make that many trades.

  19. John says 06 December 2007 at 08:18

    If you get paid twice a month, then starting January 1, transfer $208.33 each pay period into the IRA. That will get you to $5k at the end of the year.

  20. [ this is jerry ] says 06 December 2007 at 08:28

    Great post.

    The note at the bottom is one of the big reasons this blog rocks: you’re honest.

  21. Charles says 06 December 2007 at 08:38

    I am a huge proponent of Sharebuilder. I’ve been using them for over two years now to fully fund my Roth IRA, and I couldn’t be happier.

    One of the lesser known secrets about Sharebuilder is that you can get the standard plan for only $100/year. This gives you six free investments per month and waives the typical $25/year Roth IRA fee.

    I pay per year, so I effectively pay only $8.30/month and I am able to buy into six different low-fee ETFs every month, allowing me to take advantage of dollar cost averaging.

    If you’re on the basic plan making only a single monthly investment ($4/investment), you’d be paying $6.08/month (includes the $25/yr. Roth IRA fee). This may be a slightly cheaper option for those who don’t invest in many different funds, but if you are planning on investing into two or more funds per month, you’re much better off just going with the yearly plan.

    Also, one big reason I go with the yearly plan is because it is the only way that the fees don’t get taken out of your yearly contribution limit. A Sharebuilder rep told me that if you pay per month, those fees legally have to be deducted from your yearly Roth IRA contribution limit ($4,000 in 2007). I wanted to FULLY max out my IRA, which is why I went with the yearly plan.

    Also, not sure if you guys knew this or not, but ING just bought out Sharebuilder, so I’m sure there are some exciting things in the works for both companies.

  22. Josh Baltzell says 06 December 2007 at 08:43

    I don’t know if this was already mentioned, but I started a ROTH IRA with nothing at Vanguard because they let you invest as long as you put in at least $200 a month. No minimums.

  23. Ryan S. says 06 December 2007 at 08:50

    I use Sharebuilder for a regular brokerage account. I agree with JD; there are some drawbacks. Compared to my other brokerage account, which is $7.95 per trade, if I was going to invest monthly in a stock I couldn’t get from the company directly as a DRIP, I would use them, but only if I could get the monthly investment cost ($4) to about 1% or less of the investment. I am in that situation, so I use it that way. But there are other ways to make similar investments and dollar cost averaging has its advantages and disadvantages.

  24. Katrina Ramser says 06 December 2007 at 08:57

    Can you talk a little about socially-responsible investing? I switched from Hartford mutual funds to Calvert (www.calvert.com) and was assured by my Financial Consultant I’ll get about the same return.

  25. Matt Wolfe says 06 December 2007 at 09:10

    Over at Zecco, don’t they have fees for mutual and index fund trades? I think that’s how they make their money. In that case, I don’t believe Zecco is the best option for a Roth IRA because I believe that in an IRA you want to hold mainly funds.

    I think the best strategy for an IRA is to buy into funds that have no transaction fees and then make monthly contributions. Zecco seems like a good option if you plan to trade mainly individual stocks and ETFs but you will probably eventually want to switch to something that takes less management on your part.

  26. luke says 06 December 2007 at 09:14

    I’m a beginner investor, and just set up an account at Sharebuilder at $100 a month. My first $100 went in the other day, and I quickly realized my less-than-perfect scenario: I had selected their investing ‘wizard’ which suggested two funds to invest my $100 in. That turned out to be $4.00 PER fund, so they took $8.00 out of my $100. But if with one fund, $4.00 is still a 4% loss right at the beginning.

    So I changed my schedule. I eliminated one fund and just kept the S&P Index fund. Then I changed my transfers so that I was moving $100 a month into my general account (no fee), THEN, I changed my investment to invest $300.00 whenever that money was AVAILABLE in my general account.

    So I still transfer $100 a month, but my fund purchases are every 3 months. At $4.00 that’s just 1.3%

    When my debt is clear (in TWO FREAKIN’ WEEKS! Yay!) I’ll bump those numbers, and start doing the Roth IRA.

  27. Josh Baltzell says 06 December 2007 at 09:55

    Oops, sorry. I mentioned that I use Vanguard for $200 a month with nothing down, it is actually Fidelity.

  28. Daniel says 06 December 2007 at 10:13

    As mentioned above, T. Rowe Price has no account minimum as long as you set up an automatic contribution plan. $10/year fee for having an IRA. Fidelity is now waiving their $2500 minimum if you have a $200/mth automatic contribution set up. No $10 fee.

    I am a big fan of T. Rowe Price and Fidelity. They make investing easy, and have great low-cost index funds to choose from. Since Sharebuilder is based on ETFs, I’m less of a fan of them. For monthly investors, those $4 fees can make a difference.

    With T. Rowe Price and Fidelity, you can set up a brokerage account through your IRA/Roth if you decide you absolutely must invest in individual stocks. They’re not as cheap as Sharebuilder, but retirement money shouldn’t be in individual stocks anyway.

    And about whether Bill should start saving for retirement… If your finances are stable and you can continue to pay down your debts, I would recommend starting the retirement savings. When you’re out of debt, you’ll hit the IRA max contributions really quickly, so get a little jumpstart now (or before 4/15). Your 401K is a good place to hide that extra money, too, with higher limits. As early as possible in your life, you want to be plugging 10-15% into retirement savings.

  29. Dividends4Life says 06 December 2007 at 10:20

    Zecco intrigues me. Each time I get close to trying it I see a nasty post and pull the plug. It is one that I will continue to monitor.

    Best Wishes,
    D4L

  30. Mark A. says 06 December 2007 at 12:54

    The best option for this situation is an ING IRA. They charge a $10 annual custodial fee and thats it. You need at least $250 to open an account or contribute at least $25/month to your account.

  31. Justin says 06 December 2007 at 13:27

    Fidelity is a good option, too. I really liked everyone I spoke with in the customer service department.

  32. Penguin says 06 December 2007 at 13:38

    I to began my retirement investing with T Rowe Price. They have some of the best target date retirement funds out there and waive the opening minimum with a 50.00/month automatic contribution. There is a 10.00 annual fee until your account balance is above 5000.00 but to me it is a lot better than Sharebuilder. T Rowe’s customer service has always been amazing.

  33. Dan says 06 December 2007 at 14:08

    I am thinking about an ING IRA. Any more opinions or experiences about them?

  34. SR says 06 December 2007 at 14:28

    Dan: I signed on to an Ing IRA about six months ago, and it’s done nothing. Last night, it was below the amount I’ve put in to it. I have my contributions in a variety of bonds, small/medium/large cap, and dividend funds — so I don’t think it’s a matter of me being too narrowly invested.

    In comparison, an old 401k account of mine (still) at Vanguard, has averaged about a 20-25% annual return over the past six months (every month it tells you the change over the past 12 months). Sure, the Vanguard account goes down when the market does, but it doesn’t lose all it’s gains, either.

    I’m probably going to ditch the Ing IRA within the next few months. It just hasn’t performed.

  35. Rob says 06 December 2007 at 14:31

    I have T. Rowe Price and it is amazing. I started doing the $50 no-minimum monthly investment and every six months I bump it up a little more. Great funds, low expenses, great customer service and no minimums.

  36. MMJ says 06 December 2007 at 15:38

    T.Rowe has been great for me. Great fund options, low cost and no initial deposits for the automatic asset builder. We have a Roth IRA and a regular mutual fund there, plus use the Account Minder feature to monitor all my financial accounts.

  37. Melissa says 06 December 2007 at 17:23

    Another T Rowe Price fan here, though I also have some ETF’s through Sharebuilder. The automatic asset builder is a great way to get started with investing, I started with one fund once a month back in 2001 and have worked my way up to 4 funds. My account is a regular taxable one not an IRA, I believe the yearly maintenance fee some have mentioned only apply to IRA’s with less than $5k cause I went many years with a balance lower than that and never paid them a fee. If you want mutual funds, then fidelity, vanguard or T Rowe Price are the way to go since there are free ways to invest through them, Sharebuilder is good for ETF’s or stocks which always have a fee associated with purchase, I wouldn’t buy funds through sharebuilder.

  38. Phil says 06 December 2007 at 17:54

    I tend to prefer Vanguard because they have a much safer investment style. By that I mean that Vanguard didn’t get caught up in mortgage backed securities like Schwab and ETrade (and others) did. Bogle’s investment philosophy tends to permate the whole organization from what I can tell and that’s a good thing.

    However, I notice that Vanguard has the slowest website when it comes to investment sites. Anyone know why?

  39. BillyOceansEleven says 06 December 2007 at 18:11

    The only use I had for Sharebuilder was taking advantage of all the promotional bonuses they used to offer. A couple of years ago you could easily sign up for multiple accounts using different promo codes to collect the bonuses. My wife and I probably cleared $1200 doing this. Unfortunately they have closed the loophole, so now it is one and done.

  40. Tim says 06 December 2007 at 20:29

    I agree, that with $30k debt the person shouldn’t be worrying about investing. They should be worrying about est. an emergency fund and paying off the debt. of course if the discussion was about matching 401k, then it may be a different situation. forget sharebuilder and start putting money in a high yield savings account. I can’t believe people still are loyally using ING as an example and recommendation for high yield savings account at 4.2%. also, if the fed lowers rates as expected, ING will undoubtedly be the first to lower its rates again and it will be below 4% by next week.

    maintain enough to get match in 401K, get an emergency fund established, and pay off debt. forget about the ira at this point.

  41. KM says 06 December 2007 at 21:23

    I kind of hate Sharebuilder because of its fees, but that’s just me.

    I have my Roth IRA with Vanguard, which I highly recommend. If you are young, you have a lot of years ahead of you to let your IRA grow. Therefore, I would NOT go with sharebuilder or any other fee based IRA. The fees will build up over time to a substantial amount and it costs money to transfer IRA accounts.

  42. Aaron says 09 December 2007 at 18:49

    Sharebuilder is a unique tool that helps a lot of people, but it certainly is not for everyone. Paying off that debt is definitely always the thing to do first.

  43. B says 10 December 2007 at 13:45

    Has anyone looked at folionfn.com?

  44. Ed says 13 December 2007 at 11:08

    I read this post a number of days ago, but forgot to mention that if you are a Costco Executive memeber you get a 25% rebate on the monthly fees you incur if you make one trade a month. I myself am on the basic plan and invest once a month, that lowers my per trade transaction cost to $3. I am not sure if you get the 25% back on a sale order as I have not sold yet.

  45. Nikki says 21 December 2007 at 12:27

    Just to let everyone know with the purchase of Sharebuilder by ING they have already reduced the fees down 9.95 per trade. I am just a beginning investor. And I believe that SHarebuilder is good for the beginner. If you are investment savvy…I don’t recommend as some of the earlier posts read…the fees will bite you. But I have no savvy whatsoever…I don’t trade on a regular basis enough for the fees to get to me.

    Someone stated with the FED cutting the interest rates like they are there’s no point in having an ING account. I disagree…because the FED is cutting ALL the interest rates. So they’re all going down at the same rate. Places like ING and Emigrant…HSBC…will still have the higher interest rates. It may be at 3%…but it’ll be higher than the brick and mortar banks.

    Good time to get approved for a mortgage though 🙂

  46. sengly says 25 December 2007 at 20:01

    I am not a US citizen and a newbie in investment. I wonder which site is best to start investing for non-US citizen living outside US.

  47. nprfreak says 30 December 2007 at 05:41

    Reiterating and supplementing Nikki’s commnent:

    ING Direct purchase of Sharebuilder has lead to reduced trading fees for both market and limit orders: $9.95 which is less that TD Ameritrade (9.99) and much less than the big boys like Vanguard, Schwab, etc.

    The merger also makes mutual funds available to Sharebuilder customers and Stocks/ETFs available to ING Direct customers.

    I have held a Roth and Taxable account at Sharebuilder since early 2005. My only complaints have been the higher real-time trading costs (resolved by ING acquisition) and the $25 annual fee for the advertised no-fee IRA. There are some ways around this fee, most notably signing up for an expanded investment plan (6 buys for $12 or 12 buys for $20) during the renewal month for the IRA. Renewals are January or June depending on when the first account was opened. Signing up for the expanded plan in a taxable account counts toward eliminating the IRA fee.

    I agree with the general sentiment that the expanded investment plans are not a particularly good deal unless you have big bucks to invest. On the other hand, switching the plan off and on is simple and there are times (like now when the overall market is down) where the reduced per buy cost can be used for effective dollar cost averaging. For example, suppose you have $300 in the money market. You could by one stock/ETF for $296 plus $4 buy fee OR you could buy two stocks/ETFs three times in a month for a total of $144 plus $6 buy fee for each security. Obviously the second option is more “expensive” but with dollar cost averaging you could end up with more shares.

    Sharebuilder offers partial shares and free DRIP investing (not universal in the discount brokerage world), a decent Money Market fund right out of the gate (at TD Ameritrade, you have to ask and do tons of paperwork to get past their standard 1% account), ACH funding and withdrawals, and one-click changes for DRIPs, Investing Plans, etc.

    I am planning to transfer my Roth since I have enough bucks at TD Ameritrade to get some extra perks. (I’ve also started limited Roth conversions since I quit my job: no income = no taxes! I want to combine these accounts for basic management purposes.)

    With some attention, Sharebuilder is fine for an IRA, particularly in the early stages when balances are low. For a taxable account, I think it is pretty hard to beat with the new lowered trading fees. After almost three years, I have had zero problems.

  48. steve, fort collins CO says 28 January 2008 at 13:11

    The important things to understand about Sharebuilder are:

    They are the only brokerage firm I know of that lets you buy fractional shares of stock, or in other words, dollar amounts of stock. Sometimes I have only $50 to $75 to invest in a given month. Sharebuilder lets me put that money to work in stocks right away. The $4 commission doesn’t bother me that much — it’s about the cost of a latte.

    The Basic account has NO monthly fees.

    Sharebuilder offers a credit card that will automatically pay the 1% reward money directly into your Sharebuilder account. I use it for all my day-to-day purchases and pay it off every month.

    Sharebuilder is perfect for someone like me who wants/needs to invest with small amounts of money. I buy only dividend-paying stocks, reinvest all dividends and have a buy and hold strategy. I kind of think this is the essence of Sharebuilder — after all, what does their name imply?

    Sharebuilder is probably not for people who buy and sell shares often, or who are looking to profit from share price appreciation alone.

  49. CL says 04 March 2008 at 17:40

    I’m hesitant to subscribe to ShareBuilder, or buy stocks in general. i have about 1K in a Roth Ira with Van kempen… should I move it to Vanguard ?(this blog seems to have many fans).

  50. CAF says 02 May 2008 at 10:31

    Here is an idea if you sign up for the Advantage plan at Sharebuilder it cost $20.00 per month. With that you get 20 free trades. That’s $1.00 per trade. Don’t place market orders, set your account for automatic investing once per month. In the interim you can make regular deposits, say $100.00/week into their money market account at 2% interest that is paid out at the end of the month you would make about $8.00 per month… so then the account would only cost you $12.00 per month. With the advantage plan it gives you full access to company stock grades as well as their past performance. It gives the investor plenty of opporitunities to make very well informed decisions and allows them to have the control over their investments, unlike a 401k where you are forced to buy whatever stock the 401k company invests your money in. This way, you are in control of your finances and, if you need the money you can get to it in a relatively short time frame. So, for the long term investor who can only put $100/week aside for investing I feel it is a very worth while product that is on the market. I’ve just started with it and I already have made significant investments on stocks with B- to A grades that are paying decent dividends and the prices are reasonable, so, it allows me to by a lot more shares than if I had my money in a 401k. Plus, if you have children and aren’t making a whole lot of money, you could use your child credits to pay any taxes you may have to pay on the money you make. If you’re an idependent student you can use your lifelong learning credit. If you got a bachlors degree that could be a significant savings to help pay off your student loans and/or pay for grad school.

    Just a couple of ideas from a really smart guy.

  51. sengly says 12 May 2008 at 11:12

    I am not a US citizen living in Japan and a newbie in investment. I wonder which service is best to start investing for non-US citizen living outside US. I would like to do automatic investment from my paypal account but i just read the agreement in sharebuilder website saying that it doesn’t support residence living outside US. Please help since I really want to go into investment now! Any advice would be highly appreciated.

    Ps: I have posted once but noone responsed since then. And that’s why I decided to post again. It’s already 4 months since then!

  52. Share Builder says 14 May 2008 at 11:51

    Share builder will rip you off and funds will come up missing when you make transactions. When you call them tell just say tuff luck. Has anyone else had this problem with share builder? Lets start a class action because I am sure I am not the only one they ripped off

  53. Darth Pesky says 22 May 2008 at 09:42

    I have had accounts at sharebuilder for quite a few years, as well as accts at most of the other big names, so I can compare w/o bias. I find sharebuilder fills a different role for me; the auto investment plan really helps me a) save time, b) sidestep most of the famous “investor bias errors” and c) maintain discipline in routing all my excess $ into a nicely balanced portfolio at low cost. It minimizes my mental time spent on managing orders, helps me avoid second guessing market trends, etc. If you have a positive cash flow and need it a) out of your hands and b) into something productive, sharebuilder is good. I’ve had very good customer service from them, also. The fees are very modest if you use it wisely. The interest on cash is good (used to be amazing, but ING lowered it to merely decent).

  54. Christina says 17 June 2008 at 08:23

    I’ve had an ING direct savings account for a few years now, and today I decided to take the plunge and open a ShareBuilder account. No sooner had I gotten to the “What do you want to do?” page did I realize that I have absolutely NO IDEA what I’m doing. I was thinking I’d like to do some very basic, not-too-risky investing just so I get some experience with this stuff…. but I don’t even know how to start!

    I’m 25 and never done any of this before. I just finished grad school, so I’m starting to pay off my undergrad/grad loans (total: about 40K). Have a teeny 403a/401b from working in non-profit in grad school, will enroll in 401K at my new job as soon as I become eligible.

    Anyone have tips for me on how to get started? I feel like I’m drowning in all this lingo I don’t know..all these disclaimers, fees… yuck!!

  55. Cindy B. says 01 July 2008 at 11:27

    No one has mentioned direct stock purchasing to keep costs down for purchasing stocks.

    Sharebuilder.com if for those ready for buying stocks or EFTs.

    Pre-tax retirement savings plans: either through your employer or discount broker – one should start out buying no-cost mutual funds. $100/month will get you started.

    After watching the stock market gyrations – if you want to plunge into individual stocks, then consider direct stock purchase plans (dspp). You purchase from the company and forgo any broker fees. If you are going to do buy-and-hold, you get the same advantages as sharebuilder.

    The biggest advantage of Sharebuilder for me is the fractional share purchase ability. When I’m ready to buy Berkshire Hathaway shares, I’m sure I wont have $120K for one share, let alone $4K for a class B share.

  56. mwarden says 20 July 2008 at 21:18

    How can you possibly advocate investing in retirement when he has outstanding debt? He didn’t specify what the $30k in debt was, but assuming it is averaging over 10% interest and fees (which I’m sure it is, unless it’s all mortgage), then taking $x and investing it in the market earning 8-10%/yr historically is a huge loss versus taking that $x and using it to pay down the debt. The only way that it MIGHT make sense is if we’re talking about pre-tax contributions to a 401k or tax-deductible IRA. Even then, though, it depends entirely on the numbers, and I’m still betting it makes sense to get rid of that debt instead.

    The person commenting that he should invest MORE so that when he digs himself out of debt he will have something is not thinking about this the right way. Treat the debt as a negative in one’s net worth calculation. Take projected earnings from retirement savings and also take the projected loss due to compounded debt interest. The question is NOT “what do I have when I get out of debt?” but rather “when does my net worth become > $0.”

    The answer is: sooner rather than later, if you take that money and pay down high interest debt rather than investing in a (historically) lower interest investment vehicle like the stock market.

    Bottom line: if you owe me $18 in a month from now, but you could pay $10 now to get out of that debt, then you have a guaranteed 30 day return of 80% with respect to your total net worth.

    It does not matter whether you are earning a dollar or having a dollar of debt forgiven. It is just a different perspective on the same thing.

  57. Darth Pesky says 23 July 2008 at 07:05

    How to minimize fees on sharebuilder: there are a lot of variants, but here are a few (fairly obvious) pointers, since from the discussions it sounds like folks (and the column’s author) haven’t fully exploited the features to make the best use of sharebuilder (i.e. maximizing convenience & returns while minimizing fees). One step is to pick a % fee you find acceptable as a target. Let’s say 1/2% for fun. If you have very little to invest, say $100/month, then your best bet would be the basic plan (no monthly fee, but a higher $4/buy), set the amount to $800/stock you wish to buy, and set the timing of your auto plan to “when sufficient funds are in account”. And then leave it. Your $100 will go in, and when the account has $800 it’ll buy your stock, charge $4 fee, and you’ve hit your 1/2% target. In the meantime, the cash earns very decent returns (for a cash account). With this small an input you’d probably want to simply be investing in some broad low-cost index like VTI, of course, and leave the “fancy stuff” to those w/ more $$ and less sense. You can adjust your plan as often as you wish, to get other stocks. You have more options if you can put more in it, but it’s very workable if you limit the # of stocks you’re pursuing at one time commensurate w/ your free cash. If you can put in $100/week, or more, it really gets fun! But the main benefits are already reached at a low level; the cash is out of your hands, earning interest, and will automagically go into a smart investment *w/o you having to spend any more time on it, worry about it, or adjust limit orders as the market changes*. And it can be set to reinvest dividends, which is much handier (all stocks in one account) than many individual drip accounts (more than enough convenience to offset the very modest fees). You can make sharebuilder fees go as low as you have patience for; set the buy to $5200 and your fees would be $4/$5200…darn near zero. Fire and forget; move on to living your life, as all the research shows more time spent on finessing your investing actually yields lower returns (Schwab facilitated the first such study, but there have been several; investors are bad for their investments, it’s pure ego to think otherwise and unsupported by facts). And, yes, to the ranting fellow with the good point; always get rid of debt first. After that, invest happily! Best of luck to you.

  58. Isaiah says 01 August 2008 at 10:53

    I opened a Sharebuilder account earlier this year in January after my roommate told me that is what he uses. So far I am satisfied. I use the basic program so I have no monthly fees. There are some good articles about investing for beginners on there, although the actual research available about particular stocks is limited if you use the free monthly plan. I made purchases in January, March or April and made some more this week. So I have only been charged $12 ($4 per trade). I think I actually somehow received my last purchase free. I will say that I was not aware that the $4 per trade was only for buying. I’ve seen a few say that the cost to sell ranges from $11.95 – $15.95, which sucks because I didn’t invest that much in the stocks I own that would make that price to sell worth it.

    However, my roommate and a few others have mentionied that customer service is great. Furthermore, Sharebuilder is for long-term investments. They even charge you more if you sell stocks that you have owned for less than 90 days. I am not an ‘active’ trader and I only buy dividend paying stocks. My goal is too eventually own enough stock that my dividends provide a substantial income.

    I opened an traditional IRA just because they had a 7-free investments promotion. I have yet to contribute to it. I almost did it but realize they charge a $25 or so maintenance fee for the IRA. Again, my investment would not be that much so the $25 is too much for me at the time. I will probably look into other services when I decide to contribute to an IRA.

    With that being said, I would recommend Sharebuilder.

  59. Gareth says 19 September 2008 at 08:50

    You should know though that recently Zecco has been having major issue’s with login and displaying correct funds in the account. Ya $0 is nice but if you had $10,000 and one day it said $4,000 that would be sooo bad.

  60. Chad says 12 June 2009 at 14:16

    Boy are you slimy.

    You are saying “Zecco” is like sharebuilder and linking to your affiliate with them, when in reality, it is Options Trading site, which is too complicated for most average investors to understand.

  61. J.D. says 12 June 2009 at 14:45

    I’m confused, Chad. Get Rich Slowly also links to Sharebuilder through an affiliate link. There’s nothing hiding that for either one. Further, Zecco is NOT just an options trading site. Options are available there, but so are stocks and exchange-traded mutual funds. You may want to re-read their site (and perhaps this post). I’m endorsing neither Zecco nor Sharebuilder. I’m just pointing them out.

  62. Chad says 14 January 2010 at 20:01

    Wow, I didn’t think I’d ever hear someone who considers themselves an expert on finance say that the best investment to pay off debt. Anyone who has taken an undergrad class in math of finance knows that investing your money at a higher yield than the interest you pay on a home loan will be a better investment. There is no guaranteed route for consistently getting high yields, but its certainly wrong to say paying down your debt(especially without knowing the individual’s terms) is always the smartest investment.

  63. Darth Pesky says 15 January 2010 at 08:39

    Chad,
    not always, but usually! It depends on the interest rates, taxation, and risk. However, with the exception of secured home loans that are at low rates and have a tax deduction for interest payments, a more careful consideration will generally yield that conclusion. Debt payments are certain; investments are not (as recent events have so nicely illustrated they are very far from certain!). Debt payment (except for home interest) is generally with post tax dollars. Investing returns (except in Roths etc) are pretax. Make sure you compare the differential benefit on an apples-to-apples (all pre or post, risk adjusted) basis. As you can imagine, anyone who blindly thinks they’ll get 10.5% out of the S&P right now is likely in for a surprise. However, their debt obligations (generally, debt foregiveness being an exception rather than the rule) continue steadily. Happy trails.

  64. anonn says 05 April 2012 at 10:41

    this was a top google hit…so long ago, but your opinion may misinform others. a $4 fee for every $100 contribution you were making IS A BIG DEAL! you’re shaving off 4% from your principal that may take a few years (if you’re lucky in the present market) to make back and then you’re losing out on all that potential compounded interest–assuming your risk in the stock market pays off and that you don’t withdraw money from the account before retirement, which is one of the reasons you would start a Roth IRA–for its flexibility.

    but really investing is more favorable to the wealthy because principal is really the principal factor in how much ROI you can make in relative wealth. the rich get rich the poor get poorer, the disparity in wealth continues to grow.

  65. Doug says 18 June 2012 at 13:19

    ShareBuilder is a great low cost option if used wisely. First is for the basic no fee account (great for a small time low frequency investor) is $4 for a scheduled order (which takes place on the next Tuesday or every Tuesday), which is only for purchases and is $10 for market (regular) trades both in and out. What I have done is automatically transfer a small amount of money every week while I have my automatic order set for $500 which happens as soon as there is enough money available. This way it is a low cost to buy and the $10 to sell is still reasonable, although better if you selling a larger amount at once.
    You can trade mutual funds as well but they still carry the fees they if you got them otherwise. Personally I think mutual funds are a good way to pay someone to not lose you money, but I am a novice investor so take my advice with a grain of salt.

  66. Doug says 18 June 2012 at 13:24

    Oh and always consider the value of money… You have to pay off your debts, but when you have money where you can decide to invest or pay down debt remember you want to go with the higher rate if the time horizon is the same. If you expect an 8% return on and investment vs. a 15% Credit card pay down the card. If it is close remember that for non-retirement funds there are usually tax implications.

  67. Thomas says 30 September 2012 at 12:13

    While $12/mo seems high for 6 free trades a month, what you are really paying for is automatic reinvestment of dividends. If you elect to receive cash instead of reinvest your dividends, the $12/mo doesn’t make as much financial sense.

  68. Turtles says 02 November 2012 at 22:23

    Reading this helped open my eyes. I am curious but have no investment mindset. This helped me. Thank you.

  69. Sumflow says 15 February 2013 at 21:04

    When a cash dividend or share distribution, is not enough to receive a full share, which stockbrokers allow clients to receive and hold fractional shares in their accounts?

  70. Sumflow says 02 April 2014 at 14:49

    The Save by borrowing technique is another way an Investor can round off purchases, to buy income producing assets.

    See.. http://www.wikinvest.com/wiki/Save_by_borrowing_technique

  71. Paul says 09 April 2015 at 10:35

    The market order on sharebuilder is now $6.95, not $16.

    • Effie Stowe says 29 March 2017 at 13:13

      I have been investing with sharebuilder for a number of years and for me it is the best alternative for my situation. I like the ability to invest this way and it’s prices are not outlandish. you don’t get something for nothing I understand that, hence the cost of the trades you just have to discipline yourself to what you can truly afford. Investing is also a matter of expected pratfalls and a few surprises and a lot of luck!

  72. MARILYN HACKETT says 28 November 2017 at 18:04

    Some of these posts are pretty old. I would like to get some information about any other Investment site that works like Sharebuilder, but is not as restrictive. For example, you can invest and buy partial shares of NYSE stocks or funds, but not OTC stocks. I want to be able to buy partial shares of whatever I want. They do not allow you to auto invest in Cannabis stocks or crypto currencies, i.e. GBTC. I want to auto invest in whatever I want, in whole or partial shares. Where’s my hero company at?

  73. Andrew @ Forever Donor says 02 June 2019 at 15:43

    The automatic schedule of stocks sounds nice, but I’ve just used the Robinhood App for the past 4 years. No matter how good the tools a brokerage has, for me, it comes down to fee. Robinhood is free and Sharebuilder isn’t.

    Thanks for sharing!

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