2million - My Journey to Financial Freedom

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Friday, October 07, 2005

Investing in Merck? Should you consider ShareBuilder?

I have recently been expanding my investment position for Merck. I have been participating in the Merck DRIP for a few years and it is one of my least favorite DRIPs because of the unfavorable fee structure.

I have heard of ShareBuilder for a few years, but have never really considered them as an alternative to my current DRIPs. Lets take a look at how they stack up, because quite frankly I am sick of paying the Merck DRIP fees.

The Essentials for the Merck DRIP:
Account Setup Fee: $5.00
Optional Cash Investment Fee: $5.00
Automatic Purchase Fee: $2/mo
Service Charge for reinvested dividends: 4% up to $2.
Sales Fee: $5 + $.01/share

The Essentials for a Basic Account with ShareBuilder:
Account Setup Fee: None
Optional Cash Investment Fee: $4
Automatic Purchase Fee: $4/mo (same as one-time purchase)
Service Charge for reinvested dividends: none
Sale Fee: $15.95/market order, $19.95/limit order

Other Notes:
The Sharebuilder account allows you to purchase stock once a week and perform the entire transaction online which results in a quicker turn around on your investment transaction unlike the Merck DRIP which is requires you to mail a check unless you sign up for automatic monthly investment.

One time investments are cheaper in the ShareBuilder account, selling transactions are cheaper in the DRIP depending on the amount of stock sold. Based on my buy and hold strategy with Merck stock, it looks like I will save more money by purchasing my Merck stock in a ShareBuilder account rather than continuing to purchase in my Merck DRIP account.


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