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ShareBuilder Review: Alternative to Online Brokers Targets Automatic Investors

If you want to start investing, you need at least a couple grand to get you going, right? Brokers have minimum opening deposits, and then you need to buy enough shares of stock to justify paying trade commissions.

Although that may be true at many online stock brokers, it’s not the case with ShareBuilder.

ShareBuilder is a product built for investors who invest using dollar cost averaging (that is, by investing a sum of money on a regular interval over the long run). It’s the form of investing I recommend because it allows you to diversify the price at which you purchase securities by taking advantage of the market’s natural ups and downs. That means you can set up your investments and forget them.

How ShareBuilder Works

ShareBuilder is designed for automatic investing. Here’s how it works.

  • You decide how much to invest each month and which stock(s) to buy.
  • Your money is automatically transferred to ShareBuilder each month.
  • ShareBuilder purchases shares (or fractions of shares) of your selected stock(s) for a $4 per automatic investment commission.

ShareBuilder can also execute real-time trades for a higher commission.

ShareBuilder Pricing and Fees

For investors who want to purchase multiple stocks each month, ShareBuilder offers the “Advantage” plan that can reduce your overall trading fees.

  • Basic Plan: No monthly fee. $4 per automatic investment, $9.95 for real-time trades.
  • Advantage Plan: $12 monthly fee. 12 free automatic investments, additional investments are $1. Real-time trades cost $7.95.

Additional fees apply for telephone trades and options.

ShareBuilder Review: The Pros and Cons

Compared to other online discount brokers, ShareBuilder is light on features, but offers:

  • Telephone customer service
  • Online research
  • 401(k) rollovers and IRA accounts

What you won’t find are the myriad of customer service options, flashy research tools, or physical branches of other brokers. Bottom line? If you’re a buy-and-hold investors who wants the convenience and simplicity of affordable automatic investments, consider ShareBuilder. If you value flexibility and don’t mind doing a bit more of the legwork and finding mutual funds to buy periodically or even trade on your own, stick with a major discount or full-service stock broker.


Published or updated on November 8, 2010

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About David Weliver

David Weliver is the founding editor of Money Under 30. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.


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