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Monday, April 24, 2006

Sharebuilder Account Review

Last August I opened a Sharebuilder account with a $50 deposit to give it a test drive. In addition, I recently started an investment in Johnson & Johnson in my account.

Overall I am very pleased with my Sharebuilder account. When you consider the cost to buy stock is $4 vs $15.95 for my Etrade account its hard not to like that fact that your savings money.

Sharebuilder Pros
-A $4 purchase fee is hard to beat (on the Basic no subscription fee plan)
-Professional site, easy to navigate like most major brokerages
-No fee dividend reinvestment plans for holdings
-No minimums or account maintenance fees. This is probably the biggest benefit to me. I have had brokerage accounts at Olde/H&R Block and Etrade and both periodically raised minimums and account maintenance fees to reduce my returns.

Sharebuilder Cons
-The site allows you to download transaction files for MS Money/Quicken, however it doesn't have the autosync feature that most major brokerages offer that allow you to download transaction directly from your personal finance software. This is my biggest drawback.
-It is not intuitive how the purchase fee is charged. When you make an investment the site prompts you for the amount you want to invest, but doesn't tell you that your purchase fee will be deduct from the investment amount. Once you understand how the fee is deducted, its no big deal.
-I couldn't find any indepth research reports on stocks as I would expect for most major brokerages.
-Sharebuilder is not an ACATS (Automated Customer Account Transfer System) eligible broker which means transferring holdings from another brokerage to your Sharebuilder account could take longer than normal.
-The company is still building its customer base so its fee structure could become more expensive once the company's new customer growth slows.

I am going to continue using my Sharebuilder account and begin to consolidate some of my accounts to it. I am going to start by looking at my Etrade account and Merck DRIP account to see if I can save money by consolidating them to this account.


  • Sharebuilder charges $4 for ACH purchases. If you make a buy outside an ACH, it's $15.95 per trade. Therefore, if you have a monthly automatic deduction of $100 to purchase shares, the $4 is 4% of the transaction. However, if you deposit $1500 and make a purchase, the fee is only approximately 1%.

    By Anonymous Anonymous, at 3:02 PM  

  • That's an interesting point.
    How do you know which trades qualify for the $15.95/trade vs. $4.00 / trade?


    By Anonymous Anonymous, at 9:29 AM  

  • The higher fees are for real time market/limit orders. The $4 purchase fee is for one time buys or recurring purchases using the Sharebuilder Plan. This basically means they do bulk buys I think on Tuesdays of each week and your purchase will get lumped into these transactions. If your trying to time the market; Sharebuilder is definitley not the account for you.

    By Blogger 2million, at 9:51 AM  

  • Either you are not looking at the whole picture, or I'm missing something.

    Buying and selling a stock through Sharebuilder costs $20 ($4 to buy+$16 to sell). Buying a stock through Etrade costs $14 ($7 to buy+$7 to sell)

    This is the reason why I didn't sign up for their $50 bonus, because that bonus is essentially $30 because of fees.

    By Anonymous Anonymous, at 11:05 AM  

  • Maybe we are looking at different pictures. I am definitely a buy and hold investor. I have been with Eatrade since 1998 and never had a trade for $7 (you must need to be a frequent trader to qualify for that).

    For example lets look at an investment in a stock every 6mos then selling it

    Sharebuilder Etrade
    Buy 6/2006 $ 4 $14.99
    Buy 1/2007 $ 4 $14.99
    Buy 6/2007 $ 4 $14.99
    Buy 1/2008 $ 4 $14.99
    Sell 2008 $15.95 $14.99
    Total $27.95 $74.95

    It looks to me in my circumstances I come out way ahead on fees using Shrebuilder instead of Etrade. This doesnt even include all those nagging fees Etrades sticks on you.

    By Blogger 2million, at 2:18 PM  

  • Scottrade is $7/trade (market and limit) and there are no other fees, ever. Much better value and flexibility than sharebuilder, in my opinion. E-trade is a rip-off.

    By Anonymous Anonymous, at 12:32 AM  

  • If you are planning to move your account away from Sharebuilder into another company, brace yourselves because Sharebuilder actually earns commissions ($15.95) for EACH stock and then on top of it, charges you $50 for your rollover.

    if you want to maintain your account with Sharebuilder, better not move it if you dare.

    By Anonymous Anonymous, at 4:43 PM  

  • Im not sure I follow, Sharebuilder charges $50 for a full account transfer to another company if you decide to close you account. I don't see anything indicating they charge $15.95 per stock for the transfer.

    I suspect that what you might be referring is that sharebuilder could possible charge you $15.95 for the liquidation of any fractional share which they cannot transfer. Would this be what you are referring to? If that is the case I would just leave these fractional shares in the Sharebuilder account since the account has no maintenance fees.

    By Blogger 2million, at 8:16 PM  

  • Another vote for Scottrade! Great prices, easy-to-use, fast site with quick trades. They also have beautiful java-based charts and are very easy to deal with regarding customer service issues.

    By Anonymous Cortland Coleman, at 12:28 AM  

  • I used Sharebuilder for about 3 years but am now trying to get out -- the customer service was too awful and too many quirks technologically that annoyed or made no sense. For instance, I have more than once had to request a fix to get access to my tax documents; and when I wanted to change over to a Costco account (which gives a discount on the fees), they made me open a second account and then told me if I moved my securities from my first account over, I would lose my transaction history. Then they wanted to verify my identity before allowing me to access the second account -- and asked me questions that made no sense and then refused to give me access. In other words, I have full access to my first account and get into the second account! This makes no sense. The customer-service representatives were rude, spoke over me, were unsympathetic, and did not care whether I stayed with Sharebuilder or not. So I won't.

    By Anonymous Anonymous, at 9:30 PM  

  • As I buy and hold unless I decide to sell the whole stock. Why couldn't I change my free Sharebuilder account to one with 6 transactions for $12/month, sell the stocks that I have in the account. (I have 4 stocks through Sharebuilder, so that would work out to $3 each) I will have avoided the high sales fee. I know this doesn't make sense for anyone that actually "trades", but I wouldn't sell unless I was liquidating for good anyways...

    Am I missing anything?

    By Anonymous Anonymous, at 5:02 PM  

  • Careful about real-time trades with these guys. I just paid over $100 dollars in commission on a real-time trade due to their large order surcharge. Their customer service says "In addition to the base commission, a large order surcharge of $0.015 for each additional share over 1,000 shares will be incurred. The total commission (base commission + surcharge) is subject to a maximum of 2.5 percent of the principal, but no less than the base commission."

    In my mind that translates into a rip-off for large orders. No more real-time trades through sharebuilder for me!

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