When it comes to picking the right brokerage account, the type of trader you are is crucial in your decision. ShareBuilder is an online broker that is part of the same parent company of ING. ShareBuilder was created to make automatic online investments through automated withdrawals from your existing accounts so that your savings will grow automatically. It’s very similar to the way that an IRA or 401K is managed by your financial advisor.
Automated Withdrawals with ShareBuilder
Automated withdrawals can be used to your advantage in many different ways. For example, if you have ever owned a 401k or IRA, you may have noticed the deduction when you receive your pay stub at the end of your pay period. Your financial advisor set this up so that the deduction goes straight into your IRA or 401k which is typically a collection of mutual funds. These mutual funds are all made up of individual securities which commonly are shares of common stock. What ShareBuilder has created allows you to do the same thing except you are in control of your investment activities.
You can set up this automated withdrawal from either an existing checking account, a deduction from your paycheck, wire transfer or by simply mailing a check. Upon setting up your account, you get to decide the frequency as well as the amount of these withdrawals’s which will be automatically transferred into your ShareBuilder account. For example, if you receive$1,000 check bi-weekly, you can opt for $200 to be automatically invested into ShareBuilder. ShareBuilder will take whatever Equity, ETF, or Mutual Fund of your choosing and automatically invest the dollar amount. This gives you the opportunity to buy partial shares so that you can put the entire $200 into your account. At the most simplistic level, this is essentially creating your own IRA or retirement fund that you personally manage. The fees that you will be assessed depend on the account level you sign up for.
Different Accounts That ShareBuilder Offers
ShareBuilder offers three different account levels. They offer a Basic Plan, a Standard Plan as well as an Advantage Plan. The Basic plan has no monthly fee so it’s free to start. When using the automated investment method with the Basic Plan, you will be assessed a $4 fee for every automated transaction, as well as $9.95 for all real time trades. You can trade Options with the Basic Plan as well for $9.95 per trade + $1.50 per contract. With the Standard Plan you will be paying $12 per month but 6 automated transfers per month will be assessed no fee. All automated transfers after 6 per month will be assessed a fee of $2. The real time trading fees as well as options fees are consistent with the Basic Plan. With the Advantage Plan, you will be paying $20 per month and receiving 20 free automated trades monthly. All additional automated transfers will cost $1, while real time trades as well as options will also be consistent with the Basic Plan.
Like any other broker, ShareBuilder offers a variety of tools to its customers. They offer fund as well as ETF screener’s and your typical market movers and watch lists. They also offer easy tax applications to keep track of your gains/losses throughout the year which you can easily export to typical tax software programs.
If you consider yourself to be a day trader, then ShareBuilder is not the online broker for you. Their real time trades as well as options fees at $9.95 are not attractive relatively to other online brokers. ShareBuilder however is a great option if you have a good feel to pick quality ETF’s, Equities or Mutual Funds to invest in. By picking these quality investment tools you will be able to set up automated withdrawals from variety of sources to have your account grow steadily with only 1-4 dollar transaction fees dependent upon the level you subscribe to. By setting up your account with ShareBuilder you will be able to theoretically replace your financial advisor using your own skills and ShareBuilders easy automated system to steadily save for retirement without the approximate 1% fee given to your advisor on an annual basis. Setting up your SharBuilder account will take no more than 20 minutes, and requires no extra paperwork than any other financial account.