ShareBuilder looks good for the passive investor.

(Check out all of our broker reviews here)

ShareBuilder online brokerage has a new owner. They are now part of the ING Direct group that specializes in savings with good earnings. Now you can link your savings account to your ShareBuilder account for improved returns. ShareBuilder is always ranked in the top 5 of online brokerages because it has reasonable fees and commissions, a readily accessible trading system and good customer service rather than support.

You do not have to place a minimum amount of money with ShareBuilder in order to open an account and they do not charge a maintenance fee. ShareBuilder offer a unique service among brokerages with their automatic investing and reinvesting. The target market is the passive investor. The small saver who has a regular amount of cash salary deducted and wants it all invested but doesn’t want to self-manage the portfolio. So if you are looking to make ALL of your savings work but can’t be bothered watching the Dow Jones index or making limit orders then ShareBuilder is for you. ShareBuilder will give even the small savers access to the high-priced shares with fractional shares. For example if you wanted a piece of Microsoft but only had a hundred dollars saved, ShareBuilder would place a part of a share in your portfolio and you would earn pro-rata dividends and capital growth.

All of the savers’ portfolio is in stocks or other investments all of the time because of automatic investment and reinvestment of earnings by ShareBuilder and the investor is not involved in any of the decisions or actions. The passive investor will probably be attracted by the ShareBuilder headline price of $4 trades but the more active day trader would be more wary of these ‘window’ trades. This commission is only available on buys and once a week on Tuesdays. You have no influence on say the limit price or even the timing of the sale. When you place a sell transaction the commission is $9.95. While this is about the market average, day traders and active stock pickers can do better at other discount brokerages.

ShareBuilder offers three alternative savings plans to customers. They are the ‘Basic’ the ‘Standard’, and the ‘Advantage Plan’. The Basic plan is free, does the $4 automatic stock buys and makes ShareBuilder the best value choice among the competing savings companies. The Standard Plan has a monthly fee of $12 and gives 6 free automatic investments plus additional ones at $2 each. The Advantage Plan is pricier still at $20 per month, but with many more free offers; 20 automatic investments and further investments for $1 each. Real time and options trades are a single price with ShareBuilder no matter which plan you opt for. ING mutual funds are also on offer through free trades by ShareBuilder.

With Sharebuilder the saver is buying more into a strategy than developing their own. The strategy is automatic investment and zero cash holding. Their rates for automatic trades are discounted so as to encourage the passive investor while fractional shares ensure all of the money is working all of the time. In this way, wealth is built up over the long term. The price you pay for this passive investing ShareBuilder strategy is all front-loaded. For example if you looked to put $100 each month into Exchange Trade Funds $8 per month or $96 in a year is a big cost and your ETFs need to earn over 8.6% before you start to show a profit. There are better ways to get into mutual funds but it does require effort on the part of the investor. This price is just too high for the savvy trader.

Customer service at ShareBuilder is just that. If you want customer support with lots of high-tech platforms and research data to self-manage your investments then there are many cheaper online brokerages out there.

Related posts:

1. SogoTrade Broker review
2. Scottrade broker review
3. Charles Schwab broker review

The last ten bear markets:

August 1956-October 1957 Lasted 14.7 months, -21.6% market loss

December 1961-June 1962 6.4 months, -28.0%

February 1966-October 1966 7.9 months, -22.2%

November 1968-May 1970 17.9 months, -36.1%

January 1973-October 1974 20.7 months, -48.2%

September 1976-March 1978 17.5 months, -19.4%

January 1981-August 1982 19.2 months, -25.8%

August 1987-December 1987 3.3 months, -33.5%

July 1990-October 1990 2.9 months, -19.9%

March 2000-October 2002 30.5 months, -49.1%

Source: Standard & Poor’s Corporation.

Related posts:

1. Investing in stock market is simple with these great tips