Sharebuilder Review | A Low Cost Broker For Beginners

sharebuilder reviewIs Sharebuilder an online broker you should look into? What, you’ve never heard of Sharebuilder?

Sharebuilder has been around since 1996 as a low cost option for investors without a lot of money to invest. They wanted to give people with smaller savings an opportunity to invest in the stock market. And they have made a powerful impact on this segment of the market. But this doesn’t mean they are right for you.

You first need to get a full understanding of what Sharebuilder offers to see if they are a match. This is critical if you want to grow your wealth and be successful at investing over the long term.

Below is my review of Sharebuilder and why it should be on your short list when looking for a place to invest.

Sharebuilder Review Summary
  • Ease of Use
  • Account Fees
  • Account Types
  • Features
  • Customer Service

Summary

Sharebuilder has made a lot of positive changes over the years to make them more attractive to investors. If you are looking for a low cost option for investing and want to automatically reinvest your dividends at no cost, you should give Sharebuilder consideration.

4.1

My Sharebuilder Review

Sharebuilder History and Background

Sharebuilder began back in 1996 through NetStock Direct. It was created with the philosophy that to be successful, one should look at dollar cost averaging as opposed to day trading.

In 2005, Sharebuilder began to offer 401k plans to small businesses and in 2007 was purchased by ING Direct. After the housing bubble meltdown, ING sold off its US based banking business to Capital One and Sharebuilder was part of this deal. The deal was completed in 2012. Now in 2015, the name is changing from Sharebuilder to Capital One Investing. The good news is that only the name is changing – all the great features are still here!

Sharebuilder is still around and is better than ever. Capital One has certainly made some smart moves in making Sharebuilder more competitive and I hope that the trend continues.

Now Capital One Investing is moving the investing business over to E*Trade. As the competitive landscape of the online broker world is evolving, many smaller brokers are getting eaten up by the bigger players as trading fees drop. Another perfect example of this is with Scottrade and TD Ameritrade.

Sharebuilder Features

Now on to the features that makes Sharebuilder so great for investors. I’ll highlight these in bullet points and then go into more detail:

  • $6.95 online trades. This used to be higher, but Capital One knocked the price down to be more competitive.
  • Tons of investment options for investors. Choose from stocks, bonds, exchange traded funds, mutual funds, and options. You can invest in non-retirement, retirement and educational accounts as well. (If you invest in mutual funds, be sure to understand how the management fees you pay are effecting your returns.)
  • Automatic Investing Service. For $3.95 (per security) you can set up an automatic investing plan with any combination of stocks, mutual funds and ETFs.
  • Easy to use website. There is a lot to be said when you find a website that is easy to navigate and find what you are looking for. I found this to be the case with Sharebuilder. I had no issues finding what I was looking for.

Sharebuilder Benefits

There are many benefits to using a firm like Sharebuilder. Very few other brokers allow for automatic investing plans to be used by an investor. With over 1,000 no load mutual funds, and 70 no fee mutual funds, you have a good mix to choose from.

Other benefits include:

No Account Opening Fee. You can start investing with as little as you like. The only exception to this is with mutual funds. Many mutual funds have initial minimums that need to be met. The good news is that the minimums are much less than if you invested with a fund family directly. For example, if you invest in American Century directly, the fund minimums are $2,500. But, if you invest through Sharebuilder, the minimum is $250.

Low Fees. There is no inactivity fee with Sharebuilder. The only fees you will encounter are the typical fees that most places charge – wires, returned checks, etc. There are fees though to transfer your account, either in full or partially to another broker.

Portfolio Builder Service. This service allows you to pick between 6-8 ETFs and build a portfolio. You can then invest a minimum of $200 to buy the entire portfolio on an ongoing basis for $18.95.

Easy Navigation. The website is easy to navigate and is very user friendly.

Good Research Tools. Another benefit to Capital One buying Sharebuilder was the introduction of more research and investment tools.

Downsides to Sharebuilder

Unfortunately there are downsides to Sharebuilder that you need to consider. Some are bigger than others, so you will have to decide which ones matter most to you.

  • Automatic Investing on Tuesday. If you enroll in the auto investing feature, the trades are made on Tuesdays only. In the grand scheme of things, this shouldn’t matter to a long-term investor. But for those that are looking at a shorter time horizon, not getting to buy on any day of the week can be an issue. Also, the $3.95 fee is on each security you buy, not on the automatic investment as a whole. So if you set up an automatic investment for 4 securities, you are looking at close to $16 in commissions. Of course, this is still much less than if you buy them separately with Sharebuilder or any other online broker. But in the past, it used to be a fee on the total automatic investment.
  • Basic Options. If you are looking to get involved with options, Sharebuilder doesn’t allow for the advanced trading strategies that E*Trade or TradeKing offer.
  • High Portfolio Builder Cost. At $18.95 per portfolio, the fee is a little steep when you could buy a handful of ETFs through Schwab or Betterment for no fee at all.

Who Is Sharebuilder For?

The ideal clients for Sharebuilder are investors without a lot of money. If you are just getting started with investing and only have $100 or so to invest each month, Sharebuilder is a consideration for you. You can create an automatic investing plan or use the ETF Portfolio Builder and call it a day.

Of course, you should first check out the other online brokers first. I say this because you might find comparable ETFs with Schwab for no fee at all, or even at Betterment.

Regardless of which online broker you do choose, you should check out my book, 7 Investing Steps That Will Make You Wealthy, to ensure you earn the highest return with the least risk possible.

Alternatives To Sharebuilder

M1 Finance: With M1 Finance, you can invest in stocks and ETFs for free. This makes it a worth a look. You can build a portfolio using stocks and ETFs, or one or the other. They also have some pre-built portfolios to choose from as well in case you don’t want to build a portfolio yourself. You can get started with M1 Finance here.

Wealthsimple: Wealthsimple is a robo-advisor that is worth a look. They are new to the robo-advising world, but they offer free investing on balances up to $5,000 and then a super low fee after that. You can get started with Wealthsimple here.

Are you looking for the best online broker for your needs? Check out my broker comparison chart to find the perfect match for you.

Stockpile: An option for investing in stocks is Stockpile. You can buy individual stocks here for $0.99 a trade. It’s a great option for those not looking for build an entire portfolio but want just a few stock holdings. What’s really cool about Stockpile is they were created to help parents and relatives easily buy stock for their children and grandkids. You can get started with Stockpile here.

Acorns: This investing option is a twist on the traditional broker. Instead of investing money on a regular basis, Acorns works primarily by rounding up your purchases and investing your change for you. You still can invest small amounts, like $10 a time, but it isn’t required. You can get started with Acorns, who gives you $5 when you sign up, here.

Stash: Another low cost investment option. They are like a robo-advisor in that they will create a portfolio based on your goals. The catch here is that you are investing $10 at time. Most other brokers want you to invest more, but Stash is for those who have a small amount to invest. You can get started with Stash here.

Final Thoughts

Overall, Sharebuilder is a work in progress at this point. It has good and bad features. For me, I would look to the other online brokers I reviewed first and if they don’t meet your needs, then consider Sharebuilder.

6 thoughts on “Sharebuilder Review | A Low Cost Broker For Beginners”

    1. 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.

  1. 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.

    1. 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.

  2. 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

    1. 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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