{"id":1486,"date":"2007-12-06T02:40:14","date_gmt":"2007-12-06T10:40:14","guid":{"rendered":"http:\/\/getrichslowly.org\/blog\/2007\/12\/06\/the-pros-and-cons-of-sharebuilder\/"},"modified":"2023-09-24T09:59:04","modified_gmt":"2023-09-24T15:59:04","slug":"the-pros-and-cons-of-sharebuilder","status":"publish","type":"post","link":"https:\/\/www.getrichslowly.org\/the-pros-and-cons-of-sharebuilder\/","title":{"rendered":"The pros and cons of Sharebuilder"},"content":{"rendered":"

\"guy<\/p>\n

Bill wrote the other day looking for my opinion on Sharebuilder<\/strong><\/a>. 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:<\/p>\n

I was wondering what you thought about Sharebuilder.<\/strong> 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?<\/p><\/blockquote>\n

I’ve been using Sharebuilder<\/strong> for almost two year now. I like it, but it’s not a good choice for everyone.<\/p>\n

<\/span>What Does It Cost?<\/span><\/h2>\n

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

While these fees are lower than those at most full-service brokers, they’re still fees. Many people would argue \u2014 and I can’t say they’re wrong \u2014 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<\/a>. Truth be told, I will eventually move my Roth IRA to Vanguard, though that’s still months (if not years) away.<\/p>\n

Related >><\/strong> What is a Roth IRA?<\/a><\/p>\n

<\/span>Getting in the Habit<\/span><\/h2>\n

Why did I choose Sharebuilder<\/strong> if I’m not 100% sold on them? Because they made it easy to get started.<\/p>\n

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 \u2014 $4 for every $100 investment \u2014 a number that would make some people faint.<\/p>\n

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.<\/p>\n

<\/span>Another Option<\/span><\/h2>\n

Here’s my current recommendation for someone who wishes to save for retirement, but who can only afford small amounts to start:<\/p>\n