ShareBuilder Review: Discount Broker For Buy and Hold Investors

by Silicon Valley Blogger on 2009-05-085

Sharebuilder Online Brokerage

We’ve reviewed a few online brokers here before, and this time, we’re taking a look at another popular online brokerage: Sharebuilder. This broker is the investment arm of ING Direct, the online bank known for its Electric Orange Checking Account and Orange Savings Account, and of course, it’s one that has the backing of the solid ING Group, a well-known financial institution that offers services in the insurance, banking, lending and asset management areas.

So what sets ShareBuilder apart from other brokers? Let’s take a look!

ShareBuilder Review: Online Discount Broker Features

Here are 10 reasons why you may want to seriously consider ShareBuilder as your broker of choice.

1. They’re a top broker pick for beginning and long term investors.

While a lot of discount brokers these days have become notable in the online community because of their awesome prices (cheap stock trades!), ShareBuilder distinguishes itself from the rest of the investment crowd by catering to new and long term investors. Different brokers specialize on different services, and you may find that while those brokers with the cheapest commissions are favored by more active traders, a site like ShareBuilder’s may benefit the beginning investor more, since they offer a dollar cost averaging plan and a lot of investor tools and educational materials for their customers. For this, they have been honored with a Best of the Web award by Forbes.

Get more details on ShareBuilder by visiting this link!

2. They offer standard brokerage services as well as an automatic investing program.

Sharebuilder offers both an Automatic Investment Plan as well as standard broker services like real-time trades, access to mutual funds and ETFs, option trading and so forth. Now if you’re a buy and hold investor who’s keen on building an investment portfolio through dollar cost averaging (aka automatic investing), then investing through this brokerage may come out cheaper for you than if you invest with brokers like ETrade or even my favorite, TradeKing. That’s because ShareBuilder offers a pricing plan that especially benefits those investors who choose to accumulate core holdings over time. One thing to note: the Automatic Investment Plan makes its purchases on a specific day each week — Tuesday — for the consistency (and to avoid schedule adjustments due to market holidays and weekends).

3. There are no account minimums and no inactivity fees.

I go for brokers that allow for easy accessibility and low costs. You can begin an investing program with ShareBuilder with very little. You are only charged low commissions per trade. But you may find that the more you invest (the greater the size of investment or trading frequency), the better value you’ll get on commissions. So carefully choose the pricing program that best fits your needs.

4. They offer fractional share purchases.

Not all brokers may allow the purchase of fractional shares, so it’s good to know that ShareBuilder is one of those sites that will let you do this. Their support for DRIP style investing is great, with free dividend reinvestment in the mix.

5. They offer a wide variety of tools.
There was a time that ShareBuilder may have been behind the rest in terms of the tools and research materials they had available on their site. I don’t think that’s the case any longer although they could still be working on developing this area further. Given their focus on programs that help out the beginning investor, it makes sense that they’d also beef up their investment research and education section where they now have a variety of tools such as a stock screener, a portfolio builder, fund/stock/ETF selectors, reports, simulators and calculators. They also have a wealth of investment information, tutorials and articles in their investor library. But there is one thing missing: there is no investor community that’s featured very prominently in brokers like TradeKing and Zecco. If you’re going to pick the brains of your fellow investors, you’ll have to find an external forum to swap ideas and feedback.

6. You’ll get access to mutual funds, options and ETFs.

They offer the ability to purchase mutual funds, options and ETFs, as standard features of any good online broker, though there are certain funds and ETFs that may not be available through their platform. This is the case with other brokers as well, so nothing too different here. And like anywhere else, you can roll over your IRA or open a retirement account.

7. They have a flexible pricing plan.
Depending on how you plan to invest, there are three programs you can review for the best pricing that fits your activities. All of the programs (Basic, Standard and Advantage) charge the same amount for real time online trades or online option trading ($9.95 per trade), mutual fund transactions ($0 per trade) and phone trades ($19.95 per trade). As you can see, they’re a bit costlier than the $4.95 a trade you’ll get from TradeKing and Zecco, or the $3.95 per trade you’ll get from OptionsHouse. But automatic investing is where ShareBuilder shines, so if you decide to go with a scheduled, regular investing program, here’s what you’ll be charged:

DCA Program Features Basic Standard Advantage
Automatic Investments
Included with Program
6 per month
20 per month
Additional Investments
$4 each
$2 each
$1 each
Base Fee None $12/month
Most Popular
Best Value

With a base fee for the Standard ($12/month) and Advantage ($20/month) programs, you’ll get a certain number of trades for that month. And for each additional trade thereafter, it’s only $2 for the Standard program and $1 for the Advantage program. Check here for more details!

8. They have great customer service.
I’ve had the chance to talk with a few ShareBuilder customer service agents and my experiences with them have been very positive. I had an issue with site performance that I had to bring up with them. Suffice it to say, the people I spoke with were highly courteous and did a great job with following up any outstanding issues with me.

9. Theirs is a simple account interface.

Their site is well organized and easy to use. Much like the site set up for their online banking side, you’ll find their investment environment pretty straightforward and easy to navigate.

10. You can earn a high yield in an integrated cash account.
You can of course transfer your funds between ShareBuilder and any external account. But if you want instant fund transfers between a high yielding checking or savings account and your investment account, then set up all your accounts under the ING umbrella. An ING Direct Orange Savings or Electric Orange checking account can be easily linked to ShareBuilder, which is a plus if you want to earn a decent interest rate on funds that you have parked on the sidelines while you await for the opportunity to get into the stock market.

Here’s where to go for more details on ShareBuilder. Other brokers discussed in this article which you can check out: Zecco, TradeKing, ETrade.

Copyright © 2009 The Digerati Life. All Rights Reserved.

{ 5 comments… read them below or add one }

Manshu May 9, 2009 at 7:52 am

I use Sharebuilder myself and it is quite satisfactory. It is certainly not the cheapest, but, I don’t trade all that often so it’s okay.

MoneyEnergy May 9, 2009 at 9:59 am

Sharebuilder’s a great way to get started in DRIPs. As a Canadian investor, I don’t use Sharebuilder but I’ve heard great things about it. Thanks for this review!

Dough Roller May 10, 2009 at 3:19 am

We’ve used Sharebuilder and have been very happy. Because you can buy fractional shares, it was a perfect way to invest in Berkshire. It’s B shares still cost around $3,000 each, which is more than we want to invest in Berkshire each month. With Sharebuilder, you can set up automatic monthly investments for whatever amount you want.

Al May 15, 2009 at 6:28 pm

I don’t think this is a good time for a buy and hold stratagy

pdiggs June 8, 2009 at 2:39 pm

Sharebuilder is excellent for what it is designed for, long term dollar cost averaging for the investor that likde control over what they purchase (instead of relying on a shoddy 401k with excessive fees).

Now is a great time for a buy and hold strategy – only assuming you have a very long time horizon of 20 to 30 years- One cannot assume a 10% plus per year gain on the S&P as has been the case for the past couple decades, it’s highly unlikely with the obvious manipulation and corruption in the financial markets that bloated fake economic strength.
But you’ll still have to be extremely naive to think you can put your money to work in any other fixed income asset and expect to retire with a nice nest egg — you may match inflation with bonds & CDs, if you are lucky, but at least investing in the potential growth of companies will allow for significant potential of long term upsise including decent dividends.

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