Sharebuilder Review - A Brokerage Suited For Certain Investors

Sharebuilder has gone through several hands since it first started as NetStock Direct back in 1996. First, ING purchased it and made it part of ING Direct, the United States subsidiary of the Dutch company, ING group. It didn’t stay part of ING for long. In mid-2011, Capital One purchased ING Direct from ING. How this affects the service and prices is still unknown. At this point, this Sharebuilder review only contains the information available for Sharebuilder at the close of 2011, with the final takeover yet to take place.

ING Direct offers a plethora of financial services available online. ShareBuilder is the brokerage service and was part of the $9 billion dollar deal required by the Dutch Government to restructure the company as part of the agreement for financial aid to ING. It offers low cost trading if you purchase shares with the basic plan, standard plan or advantage plan for specific stocks and may be a good place for those who have limited funds to begin their investments. However, this Sharebuilder review notes it’s not for every type of trader, particularly those who have more financial savvy, since other types of trades are more costly.

Cost of Services

One of the best features found in this Sharebuilder review is the low cost of specific types of trades. If you want to invest a small amount every month or even week, you’ll want to use the Sharebuilder basic plan. The cost is $4 per trade and one of the most inexpensive around if you opt for the Basic plan. The Standard plan costs $12 per month but you do get 6 automatic trades, so if you’re making at least one trade per week, this is the best plan. After the six automatic trades, there’s a cost of $2 for each additional trade. The Advantage plan costs $20 per month but you also receive 20 free investments. For more than 20 investments, the cost per trade is only $1 per trade. However, none of the plan trades is immediate, real-time stock trades. There are over 7000 stocks and ETFs from which to select.

Real-time stock and ETF trades are more expensive at Sharebuilder, $9.99 per execution, which isn’t the lowest in town. Option trades are also $9.99 with an additional $1.50 per contract. If you have options, early exercise costs $30 and automatic exercise costs $20, neither have additional trade commissions.

Unless you’re purchasing one of the 70 free funds, the cost of purchasing no load mutual funds through Sharebuilder are $19.95. If you do purchase a fund that has no transaction fee, be aware that if a sudden emergency occurred within a 90-day period, ING has the right to charge you $49.95 as well as any charges listed in the fund’s prospectus.

There are no minimum account charges at Sharebuilder. However, there is a cost for Express funding of $6.95. This is the cost of transferring funds to your brokerage account if you don’t have enough money to cover the cost of the trade when you make the trade. While most novice traders believe this is fair, since there is a cost for overdraft protection at the bank, seasoned investors will recognize that there is no fee at traditional brokerage houses since trading costs are due trade+3, meaning three days after the trade date. However, many online brokerages won’t allow you to make the trade unless funds are in the account, so it could be advantageous in special cases.

Products and Services

When doing a Sharebuilder review, it’s important to include the products available through the site. While the brokerage part of Sharebuilder isn’t the most comprehensive, they do have ETFs, mutual funds, stocks and even offer banking services through other subsidiaries of ING Direct. They also offer margin trades. Sharebuilder offers many types of research tools to those who are in the Standard or Advantage plans but few to those with the basic Sharebuilder accounts. If you’re on a very limited budget, remember, once you opt out of the basic plan, you can’t go back. The educational center offers basic information for those new to investing. The site also offers GainsKeeper, a service to track your gains and losses, which is helpful at tax time, particularly because the results from Sharebuilder’s program transfers to several tax programs, such as TurboTax.

Platform

The platform at Sharebuilder is user friendly and designed specifically for the novice. You can set up systematic investments in dollar increments easily and cancel them just as easily, something more difficult at other sites.

Positives

• Sharebuilder is perfect for the small investor with minimum funds to invest.
• It helps new investors purchase smaller amounts of a stock at both a low cost with affordable minimums, which are required to be more than trading cost.
• Sharebuilder offers banking services.
• There are no fees for accounts aside from trading costs and express funding. This makes an account affordable for the occasional investor.
  

Negatives

• The more serious investor may find the trading costs more than many sites if they want real time trading.
• The cost of trading mutual funds at Sharebuilder is limited or expensive if you don’t choose one of the free funds.
• The resource area for the basic accounts is also limited when you consider many of the free trading tools available through other brokerage sites.
• Sharebuilder doesn’t offer all types of financial products.
  

Conclusion

Sharebuilder is a cost-saver for those with small amounts of money to invest or people who are investing in specific stocks on a regular basis. Since the low cost trades are not real-time trades, it definitely is not for the professional investor or day-trader. It does not offer all financial products as many other brokerages do, so doesn’t fare well as a sole investment account.