Hey guys I need to switch online brokers b/c Datek charges an inactivity fee now. Has anyone heard of sharebuilder.com?? They advertise $4 trades and no min or inactivity fees. Sounds to good to be true?!?!? thanks guys.
posted: Mar. 12, 2002 @ 3:26p
Try Brokerage America for $0 (free) per trade, Brown for $5 per trade, or Scottrade for $7 per trade. If you are a real buy and hold investor, try DRIPs. For beginning investors, mutual funds are probably better than stocks since it's more cost effective and provides better diversification.
Sharebuilder.com is not as cheap as it sounds. Buy orders are not real time, and sell orders costs $15.95 per trade <--- what a joke !!! (Companies with marketing gimmicks like Sharebuilder.com are quite irritating as they try to fool beginning investors)
posted: Mar. 12, 2002 @ 3:28p
Yeah, I'm thinking about doing ShareBuilder too. There's also one called BuyAndHold. I used FolioFN before. It's great. But they charge $340 a year. ShareBuilder is a lot cheaper ($12 a month).
There are other threads on this too. Do a search.
posted: Mar. 12, 2002 @ 3:29p
If you have $5,000 in your account, Datek won't charge you a fee.
posted: Mar. 12, 2002 @ 3:31p
are you sure the selling is $15.95? for $12 a month, you can buy and sell as many times as you want. at least that's what i thought i read.
my question is, what about IRAs? in order to sell, does that mean that we're locked in to pay $12 month a year for 40 years (assuming we're 25 right now)? that's what i'm not sure about.
posted: Mar. 12, 2002 @ 3:36p
>>>> Copied from Sharebuilder.com website <<<<
We have two pricing options for making ShareBuilder Plan investments: Option A: $12 per month - All you can Build: A monthly subscription to ShareBuilder that entitles you to unlimited purchases of stock for just $12 per month.*
Option B: $4 Pay Per Transaction: You pay only $4 per recurring or one-time purchase*
Real-Time Trades. You can also place a real-time market or limit order for $15.95.
* All sales of stock are made real-time and cost $15.95.
Senior Member - 2K
posted: Mar. 13, 2002 @ 1:06a
You pay for the monthly fees either from the IRA funds or outside of the IRA. If you end up not liking Sharebuilder or Buy and Hold, you can always transfer the IRA to another brokerage. You'll probably have to pay an account closing or transfer fee, and that is normal in the brokerage industry.
posted: Mar. 13, 2002 @ 8:41a
ShareBuilder is for long term investors who don't have much money to invest. It is NOT for people who are day traders or for people that move money in and out of stocks regularly.
With ShareBuilder you can start to build a portfolio of stocks that you would not otherwise be able to afford. With ShareBuilder you decide how much you want to invest. $25.00/mo, $100.00/week, a one time investment of $500.00 or $20.00. It is up to you. You then decide which stocks you want to invest that money into. With the $12.00/mo feature you can pick as many stocks as you want. Obviously if you have a small amount to invest and choose lots of stocks it will take a while just to get 1 share. (With ShareBuilder you can own partial shares). The stocks are purchased once a week (4 times a month) on Tuesdays.
I use it to invest $125.00/mo in 4 different stocks for my 1 year old daughter. I started it when she was 4 months old. You will be amazed at how fast things build up. She already owns 4 shares of Microsoft.
posted: Mar. 13, 2002 @ 12:41p
One of the catches I've found with Sharebuilder is that if you want to liquidate your position that includes partial shares, you have to enter a market sell order, not a limit order.
Be careful if you have your account set up to automatically reinvest dividends if you're closing out one of your positions...I recently closed out my holdings in Intel, and a few days later I received a dividend that was reinvested in about 0.618 shares. Now I'll have to pay another $15.95 to liquidate those partial shares!!! ARGH!!! <img src="i/expressions/face-icon-small-mad.gif"border=0>
Also, I believe that if you want to transfer shares to another brokerage, they charge $50 per stock. Partial shares must be sold first via a real-time market order...ick.
I like ShareBuilder for long term buy and hold stock purchases, but they suck when you want out...
posted: Mar. 13, 2002 @ 4:35p
Here is ShareBuilder's fee schedule for transfering your assests. The maximum amount is $50.00
Full account transfer out. Transfers of all assets in a ShareBuilder Account to another firm $50.00
Partial transfer out. Partial transfers of assets in a ShareBuilder Account to another firm $10.00 per security ($50.00 maximum)
There are definitely things you need to be careful of. Like if you are paying the monthly fee for unlimited buys and want to skip a few months, then you need to change to per transaction and then inactivate your account.
Overall though, it is a good way to build a portfolio.
posted: Mar. 13, 2002 @ 4:43p
As far as selling according to their web page you can do market or limit sells. If you are only selling partial shares then it will be the closing price for the market.
To sell shares of any security in your ShareBuilder Account, simply use our Real-time trade feature. Trades placed while the stock market is closed will be held until the opening of the next market day. There is a $15.95 transaction fee for each sell order placed through ShareBuilder Securities Corporation. To place a Real-time sell please follow the instructions below:
Click on the Manage your Account tab. On the left-side navigation bar, click the Real-time Trades link. For Which Stock? enter the ticker symbol of the security you are selling. For Order Type? select Sell. For How many shares? enter the number of shares you would like to sell. If you would like to sell a partial position in the security (either as part of a larger sale, or by itself), include the partial share in decimal format in the How many shares? field.
Note: Partial shares may be sold by themselves or as part of a larger transaction, however, you must sell the entire partial share.
Select either Market Order or Limit Order. If you are placing a limit order, also select the price that you would like and whether the order should be Good Until Cancel or if it should Expire at end of today Once you are finished entering your order, click Preview Order. Verify that the information is correct, if so click Submit.
Important: If you are selling less than one full share of stock and your request is received during market hours the partial share will be sold at the closing price for that market day. If a request is received after the market has closed, it will be processed at the closing price for following market day.
After a sell order has processed, the funds are available immediately for reinvestment. If you would like to request a check for the funds, the request will be processed after the settlement date.
posted: Mar. 14, 2002 @ 8:21a
Unless your portfolio is over $10,000 you are paying way too much on Sharebuilder. Do the math. $12 per month x 12 months = $144 per year. On $10,000 that is an expense of 1.44%, and on a $1,000 portfolio the expense is a huge 14.4%
It's cool to build your own portfolio, but for small investments, Sharebuilder does not make any sense.
posted: Mar. 14, 2002 @ 9:23a
Thanks for the awesome replies guys. Whats the most cost effective broker for a college student..trying to learn about finace (im a cpe major). Whats the deal if i want to get out of datek completely? $50 closing fee and what about the stocks i own if i dont want to transfer it? Do I have to pay the $75 to get my stocks on paper?
posted: Mar. 14, 2002 @ 10:08a
I understand your point about keeping investing cost down, but what do you suggest for an individual that only has $50.00 dollars a month to invest? Most brokers require at least a $500.00 minimum deposit just to open an account. Also many will charge maintenance fees unless your portfolio is worth a larger amount.
IMHO, seeing that you actually are an owner of a company (even if it is only .25234 of a share) is more rewarding and motivating then having to wait 10 months just to get started. Then you will need to wait another long period of time before you could buy again.
posted: Mar. 14, 2002 @ 10:48a
If you are starting with $50 per month using Sharebuilder, at the end of the year you would have $600 less $144 in fees = $456. In order for the portfolio to make any money it would need to gain about 25% just to breakeven !!!
Sharebuilder just does not make any sense for small portfolios, the fees would eat the portfolio alive. For small investors, the only choice is (1) mutual funds, or (2) save enough money to make Sharebuilder economical
posted: Mar. 14, 2002 @ 10:58a
On second thought, I honestly don't think Sharebuilder makes any sense at any portfolio size, there are brokers out there that are cheaper.
The buy and hold investment strategy does not always work. Even the S&P 500 is not a real buy and hold strategy, because every year S&P adds and removes companies every year.
Anyways, for $50 per month, a mutual fund is the logical choice.
posted: Mar. 14, 2002 @ 11:39a
People with only $50 a month are the ones with the most to lose by using sharebuilder. Even if they're only using the $4 single trade option, that's $4/$46 = 8.7% commission on every trade. When you consider that they could be earning about 3% per year in a no-minimum savings account like ing direct, that means you're starting out in a pretty huge hole. In my very, very amateur opinion, they're much better off putting the money in a savings account and getting crappy returns until they have enough to open a brokerage or mutual fund account.
I don't think sharebuilder is necessarily a bad option for certain people, but I really don't like how they target very small investors with only a few dollars a month to set aside.
posted: Mar. 14, 2002 @ 8:58p
Just an update to my comment above:
<< Be careful if you have your account set up to automatically reinvest dividends if you're closing out one of your positions...I recently closed out my holdings in Intel, and a few days later I received a dividend that was reinvested in about 0.618 shares. Now I'll have to pay another $15.95 to liquidate those partial shares!!! >>
After emailing ShareBuilder, they replied stating that they have a policy where if you want to sell less than one full share of a security (market order only,) there is no charge!
This implies that you can liquidate your position as a limit order for your whole shares, and your partial shares as a market order for a total of $15.95.
posted: Mar. 15, 2002 @ 8:54a
Personally prefer individual portfolio to mutual funds, but if someone is really investing $50 per month, there is no possible way they will come out ahead. You cannot earn enough from the portfolio to offset the costs, you are throwing your money away if you use these services and invest $50 per month.
Average historical stock returns is around 8%, ok let's say you are good and get 20% annually, but that is not enough to cover the expense of $144 to $295 per year... it's a losing proposition.
Example of $50 per month investor:
$600 at end of year invested x 20% return = $720 - $144 sharebuilder = $576 (you actually lose $24 per year)
$600 at end of year invested x 20% return =$720 - $295 folio = $425 (you actually lose $175 per year)
I hope the simple example above makes clear the absurdity of using these services. I am so sorry to be so negative, but if you do the math, you actually will be losing money instead of saving money.
posted: Mar. 15, 2002 @ 3:31p
I see your point about the cost of investing. Of course you are assuming that someone investing $50.00/mo would opt for the all you can buy plan for $12.00/mo instead of the $4.00 per trade plan.
Just an FYI, starting 04/01 Brokerage America will be charging commisions.
1. want to do something like DRIP, which you can pick specific companies to invest, 2. and can liquidate your investment easily.
well, I bought MO and HBC with sharebuilder whenever I have few hundreds bucks. $4 per transaction.
posted: Mar. 15, 2002 @ 10:21p
On second thought I don't see your point. Your example is too simple. ShareBuilder is for long term investors. So if we take the person who invests $50.00 a month and buys one stock (not neccesarily the same stock) at $4.00/mo and they do this for 10 years with an annual return of 4%, the numbers take on a different look.
Year 1 600.00 x 4% = 24.00 48.00 = -24.00 Year 2 1200.00 x 4% = 48.00 48.00 = 0.00 + -24.00 = -24.00 Year 3 1800.00 x 4% = 72.00 48.00 = 24.00 + -24.00 = 0.00 Year 4 2400.00 x 4% = 96.00 48.00 = 48.00 + 0.00 = 48.00 Year 5 3000.00 x 4% = 120.00 48.00 = 72.00 + 48.00 = 120.00 Year 6 3600.00 x 4% = 144.00 48.00 = 96.00 + 120.00 = 216.00 Year 7 4200.00 x 4% = 168.00 48.00 = 120.00 + 216.00 = 336.00 Year 8 4800.00 x 4% = 192.00 48.00 = 144.00 + 336.00 = 480.00 Year 9 5400.00 x 4% = 216.00 48.00 = 168.00 + 480.00 = 648.00 Year 10 6000.00 x 4% = 240.00 48.00 = 192.00 + 648.00 = 840.00
840.00/6000.00 = 14% increase in your investment
And this doesn't take into account the 4% you would be earning on your earnings.
posted: Mar. 16, 2002 @ 2:18a
Your best bet is to
A) Set aside a saving plan with your bank savings account or like with an ING account and build up enough capital (usu $5,000) to open a brokerage account and *NOT* be charged a maintenance fee/monthly fee/any fee.
(read the fine print, some charge inactivity fees if you don't trade but have enuff capital...also E*Trade is fairly lax, they give you *1 YEAR* before they begin charging you $15/quarter if you have less than $5,000)
B) If you still want to invest in companies and have less than $5,000 or whatnot (you shouldn't be in the stock market really ...but anyways) you can purchase shares directly from certain companies (esp. good blue chip companies like IBM, Coke, Southern Company, Pfizer, Merck, etc.) and then setup Dividend Reinvestment Plans. Some might have minor fees (like a few cents here or there when dividends are reinvested) but usu. there's no annual fee and you can throw in more money whenever you want (and usu no fee here as well). (Check out www.equiserve.com and see what companies they offer, they're one of the biggest DRP program thingies).
posted: Mar. 16, 2002 @ 10:45a
A 14% total return over 10 years is 1.4% a year... you would be better off with a CD. Also, if you are only going to invest in one stock, a DRIP would be much cheaper.
I'm sure there are situations where the return could be better, but the point is that Folio and Sharebuilder are not as good a deal as they appear.
posted: Mar. 16, 2002 @ 12:49p
You keep forgetting that the person is only investing $50.00/mo. Where can you get a CD for $50.00/mo??? Plus this was at a 4% annual return, you might get a better return. With ShareBuilder I can change month to month the stock I buy. With DRPs you would have to either purchase 1 share before you could start the drip (which would mean having a brokerage account or buying from oneshare.com and paying huge fees for that service). Also some require a high initial investment to start. One would expect that over a 10 year period that a person could increase the amount they were investing and if they still only bought 1 stock/mo their cost wouldn't go up. The point is ShareBuilder allows a person of meager means to start a portfolio that over the long term will probably make money. For many people, putting money away so that they can invest later won't work. They usually will spend it before the 4 or 5 years it takes them to save it up to make that large investment, plus they have wasted those 4 or 5 years.
posted: Mar. 16, 2002 @ 1:34p
Instead of CD, try Savings Bonds. You can buy them for $25 and the interest is over 4%, plus it's tax deferred.
We'll just have to disagree on the value of Folio and Sharebuilder. Scottrade is probably the best deal if you want to buy stocks at $7. The minimum is $500 to open account, but if someone does not have $500, they really should not be investing in stocks to begin with.
posted: Mar. 16, 2002 @ 7:40p
I briefly looked at Sharebuilder but quickly left after I saw you could only buy certain securities through them. I was using CSFBdirect but left after I got hit with a $15/quarter for having less than $10k. I switched to Ameritrade where the minimum balance is only $2000. One thing I like better about CSFB though is that you don't need the money in your account to buy stocks. You just need to get them a check within 3 days to settle. With Ameritrade you need the money in your account or a margin account.
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