Sharebuilder Review

by Jon Dulin

sharebuilder reviewFor those of my readers that don’t know, I use Capital One 360 as my primary bank. I have both a checking and savings account through them. Every so often, I get an email from them regarding their investing arm through Sharebuilder. I never have been interested in Sharebuilder as I use Schwab for my investing. I have had no issues with Schwab and the fees that I pay to trade stocks are reasonable.

Most of the offers from Sharebuilder are for free trades, which I am not really interested in because I do not do a lot of trading. I mainly invest in mutual funds and ETF’s and hold for the long term. However, the recent offer I received for $50 interested me. I decided to look at the site.

Sharebuilder Review

While I feel that Sharebuilder is not ideal for stock purchases, it could be a nice starting point for small mutual fund investors. Through Sharebuilder you can invest in over 250 mutual funds from 8 fund families including American Century, PIMCO, Fidelity, T Rowe Price, and Vanguard. Unfortunately, if you invest in Vanguard, T Rowe Price, Fidelity, or Dodge & Cox, you will pay $19.95 per trade. If you want to set up an automatic investing plan, that will cost you $4 per investment.

I refuse to pay to invest in these fund families. Luckily though, there are some good funds offered through the other four fund families that do not charge a fee for you to invest in. They include American Century, PIMCO, ING Funds, and Dreyfus. Even better, if you invest in American Century directly, the fund minimums are $2,500. But, if you invest through Sharebuilder, the minimum is $250. This is great for small investors who don’t have $2,500 to start. From there, you will need $100 to invest each time again.

Sharebuilder Review: Stock Investing

The reason I am against Sharebuilder for stock investing is if you are a small investor, you should be focusing on investing in mutual funds so that you are diversified. Investing in one stock is not diversified. For normal stock trades, you will pay $6.95 per trade. If you sign up for the basic automatic investing plan, the fee is reduced to $4 per trade. If you upgrade to the advantage automatic investing plan, the fee is $12 per month which includes the first 12 trades. Any additional trades are $1 each.

If you are going to invest in a stock frequently, you have two options. The first is to save up the money you want to invest in the stock and make a one-time purchase for the $6.95 fee. It makes no sense to buy 1 share of stock each month for $4, or pay $12 per month for the privilege if you aren’t going to trade that frequently.

The second option is to accumulate investing credits. Each credit is worth one free automatic investing trade. I received on trade on my birthday and was awarded three more when I signed up. A quick online search yielded a handful of promo codes to try. Most weren’t accepted, but some were. In the end, I had eight trade credits. I set up an automatic investing plan in a stock I wanted. I bought once per month for eight months. I never paid a fee as the free trade credits were used each time.

Sharebuilder Review: Mutual Funds

I ended up buying a no-fee mutual fund through Sharebuilder for free. After I made my investment, I was credited with my $50. The account registration process was a breeze (I’m not sure if that was because I already had a Capital One 350 account or not). The transfers of money from Capital One to Sharebuilder are instantaneous, which is awesome. For how I am using Sharebuilder, I think it is a great service. You can find some good, no-load, no-fee mutual funds to invest in with a very low initial investment.

Sharebuilder Review: Other Features

There are three extra features that Sharebuilder offers that I need to mention:

Retire MyWay: This feature helps you to define a plan for the way you want to live in retirement. This is great since you need to have a plan in order to be a successful investor.

Heat Map: The Heat Map feature is a quick look to see how securities are performing by index, sector and more. It’s a great way to get caught up on the market at glance.

Portfolio Analysis: The Portfolio Analysis highlights the asset types and sectors represented in your portfolio.

Sharebuilder Review: Site Navigation

Using the website is easy. Everything was in a logical place. I didn’t have to search around for much. The only thing I did need to search for was how many free trades I had. Once I realized they were listed in the Automatic Investing tab, I had no other issues with the website.

Sharebuilder Review: Customer Service and the Rest

I contacted customer service on a whim, just to see how responsive they are. I actually contacted them a few times via email and each time, they responded within one business day. I thought this was acceptable.

When it comes to taxes, I received an email that my 1099 was ready and was available online. I logged into my account and there it was in the Tax Center.

Overall, the only issue I have with Sharebuilder is that they charge you a fee to close out your account. It is $75 for a full account closure and $40 for a partial closure.

Sharebuilder Review: Conclusion

My Sharebuilder review is complete. Here are the takeaways in bullet points:

  • If you are looking at investing in certain mutual fund families, like Vanguard, you are better off saving up the $3,000 and investing directly with Vanguard as opposed to paying the $19.95 to Sharebuilder.
  • Sharebuilder is great for no-load, no-fee mutual fund investing. They don’t have the relationships that Schwab has with mutual fund families, but they offer a good variety. Sharebuilder knows this, and this is why they offer sign up bonuses to get your business. If you see a fund family you want to invest in and Sharebuilder is offering a sign up bonus, I say go for it.
  • For stocks, if you are making large, sporadic investments, the $6.95 per trade fee is in-line with the industry.
  • If you are going to be trading stocks frequently, I suggest you sign up for the advantage investing plan for $12. If you trade more than two times per month, you’ve already saved money on the trading fee.

 

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{ 6 comments… read them below or add one }

Mildred January 3, 2012 at 3:43 pm

Why does Sharebuilder charge such high fees for Vanguard Funds?

Reply

moneysma January 3, 2012 at 3:47 pm

Mildred,

To clarify, most of the mutual fund options on Sharebuilder do not charge a fee. The one's that do (Vanguard, Fidelity, etc) do so because the fund company itself forces sites such as Sharebuilder to pay a fee to offer their funds. It's not just with Sharebuilder. If you try to invest in Vanguard funds through Schwab, then you are looking at a $19.95 per trade fee as well.

As for stocks, the $9.95 is reasonable when compared to many others. Where it really becomes expensive is when you make small re-occurring purchases every month for $4. You are much better off saving your money and investing less frequently.

Reply

EL @Moneywatch101 April 2, 2014 at 10:15 am

I have sharebuilder, I think its ok. I don’t like the fact that the 4 dollar trade, you have to schedule it for a specific Tuesday of the month. Besides that it is very user friendly.

Reply

Jon Dulin April 3, 2014 at 7:35 am

I agree. I used my free automatic investing credits to buy a bunch of stock without commission and now just buy no transaction fee mutual funds so there is never a charge.

Reply

Dividend Diplomats August 9, 2014 at 6:18 pm

Money Smart,

I love sharebuilder. Low fees, automatic free dividend reinvestment plans, plenty of “hoo-has” with free trade credits on the birthday, etc. Also – their research articles are great, seamless transactions between my checking/savings account with them, their express funding is awesome as well – where it’ll pull from the capitalone360 account when you go to trade, so you don’t have to have the cash in there to make the trade. I highly recommend and have been using it for 5 years.

-Lanny, one of the diplomats
Dividend Diplomats recently posted..American Express (AXP) Stock AnalysisMy Profile

Reply

Jon Dulin August 11, 2014 at 3:00 pm

The moving of money between the Capital One 360 account and Sharebuilder is a nice feature. It just auto pulls whenever I make a trade..no extra step for me involved!

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