I’m Closing My ShareBuilder Account

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Several years ago I opened a brokerage account with ShareBuilder because they offered a $50 cash bonus for opening a new account and placing a trade (the bonus is still available for those who are interested). Since I was more or less playing with house money, I decided to roll the dice and I bought…

Several years ago I opened a brokerage account with ShareBuilder because they offered a $50 cash bonus for opening a new account and placing a trade (the bonus is still available for those who are interested).

Since I was more or less playing with house money, I decided to roll the dice and I bought a few shares of a company in a speculative market. I figured there was room for growth and the potential upside far outweighed the risk. After all, it was $50 of free money!

Unfortunately, the stock crashed and burned and I was left holding a dozen shares of stock which were barely worth more than the cost of trading them. And that brings up one of the problems with ShareBuilder… their real-time trade fees.

Why I am Moving Away from ShareBuilder

deciding to close a ShareBuilder account
Thanks for the memories…

ShareBuilder really only does one thing well – they offer a place for the systematic growth of wealth and building shares (get it, ShareBuilder?). Right. Their business model is built on inexpensive scheduled trades, which ring in at $4 a trade (or even as low as $2 if you join one of their monthly premium plans which costs a monthly fee).

To take advantage of the low-cost stock purchases, you must set up automatic trades to execute on a regular basis – weekly, monthly, semi-annually, whatever. This makes ShareBuilder an affordable company to use for dollar cost averaging.

When they came on the scene, they more or less offered investors one of the least expensive ways to trade stocks outside of buying DRIPs directly from a company (no commissions) and reinvesting your dividends (again, no commissions). ShareBuilder also offered the ability to buy partial shares, which made the systematic investment of a set sum of money each month an easy way to invest.

An Outdated Business Model

But ShareBuilder stuck with their business model and failed to innovate. In my opinion, they are not the best company for making real-time trades, which ring in at $9.95 each (it was as high as $14.95 as recently as a year ago). That’s simply too expensive for most people when there are a dozen other highly rated options that offer cheaper stock trades.

Offering inexpensive prices for scheduled trades reduces Sharebuilder’s costs, which they can then pass on to their customers. And the higher real-time transaction fees encourage people to “build” their number of shares by holding them long term and reducing their turnover. In other words, ShareBuilder is a great place to buy shares, but not to sell shares.

This business model set them apart when they launched, and it stays true o their name. But it is now outdated, particularly their fee schedule for real-time trades. The base price for scheduled trades with ShareBuilder is $4, which is more than real-time trades with some other discount brokerage firms. Even some of the top rated discount brokerage firms charge in the $4-$5 range for real-time trades (see Ally Invest if you are looking for an excellent alternative in this price range). To put it another way, you get all the benefits ShareBuilder offers on the buy side (inexpensive stock purchases, ability to buy partial shares, reinvest dividends, etc.), and you can sell your shares at the same price you buy them.

No Inactivity Fees – Why Close Your Account?

The good news is ShareBuilder doesn’t charge any inactivity fees or other associated account fees, so leaving my account open wouldn’t hurt anything, but then again, it wouldn’t help me either. I still believe ShareBuilder is a good option for some investors, but I decided I wanted to be able to better control my costs for real-time trades (I’m not a heavy trader, but I also don’t believe you need to buy and hold forever). So I decided to close my account in the interest of simplicity. Having fewer financial accounts makes managing money easier and right now I value simplicity above having another dormant account.

Other Discount Brokerage Options

I still think ShareBuilder has its place, but there are many other online discount brokerages out there right now offering better alternatives. And sometimes, it’s just nice to consolidate accounts to reduce the number of accounts you have to manage, and the tax forms you need to deal with!

For example, I currently have active brokerage accounts with TD Ameritrade and Scottrade. I also have mutual funds and other investments with Vanguard and USAA, which are both great places to invest.

There are dozens of great brokerage firms out there, so be sure to examine your needs and evaluate online brokers before signing up for one, and if your investment needs change, don’t be afraid to change to another brokerage. Many of them offer reimbursements for transferring your assets. You will do better in the long run to keep most of your investments in one or two locations instead of having them spread out like I do!

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About Ryan Guina

Ryan Guina is the founder and editor of Cash Money Life. He is a writer, small business owner, and entrepreneur. He served over 6 years on active duty in the USAF and is a current member of the IL Air National Guard.

Ryan started Cash Money Life in 2007 after separating from active duty military service and has been writing about financial, small business, and military benefits topics since then. He also writes about military money topics and military and veterans benefits at The Military Wallet.

Ryan uses Personal Capital to track and manage his finances. Personal Capital is a free software program that allows him to track his net worth, balance his investment portfolio, track his income and expenses, and much more. You can open a free account here.

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  1. Celia says

    I think you and many others missed the whole point of sharebuilder … now capital one. It was for people who like me had very little money to invest and also invest let say a bit more safely given a smaller understanding of stock market options for trading

    It frustrates me no end they have eliminated the sharebuilder plan since the successive buyouts. They forgot what got them where they are and are chasing only big investors … which is a much smaller number and comes with much competition

    You decided to do something ridiculous so you bash the company. When I began investing about 12 years ago even a few dollars was a lot of money to give up but I went without to do it … investing in companies which paid a dividend and which were in for the long hall.

    My first dividend of one of those companies was .01 cents. Now my dividends for that company are about $16 or so dollars. Maybe small peanuts to some but in terms of growth … quite amazing. Multiply that for the several companies I have stock in and I have a nice nest egg.

    Another company I invested in was roughly 30/share. Since then it has become one of if not the richest companies in the world, pays a dividend, has risen dramatically and split so investment there is up over 500%

    In the meantime my salary has risen and I have 401k money and other investments to lend to my financial stability … but it is sad because I would like my kids … now in their 20s … to be able to do the same … start another savings/investing vehicle … pick good companies put aside an affordable sum every month and let’s it ride.

    Thus far no one has figured out that contrary to your opinion this is a good model and could benefit meny people by providing a pathway to investments but the world is full of sheep … it is always easier to walk in line than make Your own path

  2. Dan says

    I agree Celia. I’m really unhappy that the Sharebuilder plan (formerly of ING and Capital One) is going away. I keep looking for something similar hoping that someone will step in to fill the void, but apparently the little guy/gal isn’t worth the effort. I started about 10 years ago, and my modest investments have more than tripled in that time, in no small part because I was able to buy a couple of FAANG stocks, albeit very slowly. I would think that there is money to be made with a sharebuilder type model – here’s hoping that someone picks up the ball.

  3. David says

    I opened a Sharebuilder account many years ago and used it for quite a while. But over time the fees got too high so I moved my business elsewhere. There were some SB features I liked, but they weren’t enough to keep me. Lots of better brokerage options today.

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