What is Sharebuilder?

Like many other similar websites, Sharebuilder is a result of the way the internet has changed investing, with many people now preferring to use online brokers that trade at far lower fees. Sharebuilder is a site that allows non-professional investors to buy and sell commodities, exchange traded funds, mutual funds, stocks and bonds. What makes Sharebuilder different is that it is not a new, or even new-ish, development of the changing times. Indeed, Sharebuilder is a pioneer, having been operating for close to two decades. Recently, it was bought by Capital One 360, but it remains a distinct platform and a member of the Securities Investor Protection Corporation, meaning that investors will be compensated if the brokerage should declare bankruptcy. This goes up to a cap of $500,000.

Sharebuilder was set up in 1996 in Seattle as “NetStock Direct,” one of the first brokers of its kind. It was supposed to be an efficient way to buy and sell securities without needing a human broker. Customers on Sharebuilder, unlike in many other sites, direct themselves, do their own research and carry out their own trades.

Sharebuilder was bought in 2007 by ING Direct for over $200 million. By this point, the Robo Advisor boom had begun. ING Direct was then bought by Capital One in 2012, and now SB is Capital One’s online investment platform, intended to serve as a complement to Capital One’s other banking and lending services.


What Does Sharebuilder Offer?

Sharebuilder’s features include many that are common to other online brokerage services, but because of its history and its connection to Capital One, there are also features on Sharebuilder that cannot be found across the board on similar sites. The major features of the site include:

  • Automatic Investing. This unique feature allows you to schedule automatic investments in more than 7,000 stocks and ETFs for a cut-rate commission of $3.95 per trade – a savings of 40% on the regular per-trade commission of $6.95.
  • Small Business 401k Accounts
  • Individual Retirement Accounts, which may be either traditional or Roth IRA and can be opened with a deposit of cash, for which there is no minimum.
  • Access to IPOs. Sharebuilder allows regular investors to get in on IPOs (initial public offerings), which are the first share offerings of newly listed companies.
  • Low Commissions on Mutual Funds, Bond Funds, and ETFs. Sharebuilder customers can buy and sell stocks, mutual funds, bond funds, options, and ETFs (which are baskets of securities that typically track underlying indexes, aren’t actively overseen by fund managers, and trade on stock exchanges) in multiple ways through its online platform. Using Sharebuilder’s Multiple Order Entry function, you can place up to six orders at once.
  • Tax Help and Statements.
  • Options Trading. You can use Sharebuilder to trade put (a contract that gives you the right to sell a stock at a specified strike price) and call (a contract that gives you the right to buy a stock at the contract’s strike price) options on stocks and ETFs.
  • Self-Directed Research Tools. Sharebuilder has research tools for all of the securities available through its platform, including stocks, mutual funds, bond funds, options, and ETFs. For mutual funds and bond funds, you can use variables such as fund type, fund risk, five-year return, independent analyst ratings, and expense ratio to screen for securities that fit your investing preferences. You can also use these tools to find individual stocks based on relative valuations (“Basement Bargains”), analyst recommendations (“Highly Rated Performers”), dividend profile (“Divvy Up the Dividends”), and industry.
  • Comprehensive Mobile Platform. All of Sharebuilder’s key features are available on a mobile platform that works with smartphones and tablets. The smartphone platform is compatible with iOS, Android, and Blackberry devices.
  • Bonuses for new accounts. It offers a graduated bonus scale that throws off progressively larger payouts for larger deposits:
    $100 for a $10,000 deposit
    $200 for $25,000
    $300 for $50,000
    $600 for $125,000
  • Over-the-Phone Trading. Phone trades cost $19.95 and may be made between 8am and 11pm EST, Monday through Friday.
  • No Minimum Deposits for New Accounts. Unusually, there’s no minimum deposit required to open a Sharebuilder brokerage account.

Image of Sharebuilder dashboard


So What Are The Advantages and Disadvantages of Sharebuilder?

One of the biggest advantages to Sharebuilder is that, even among low-cost online services, it stands out as having fairly low fees and commissions. $6.95 as a commission for trading is cheaper than the fees charged by Wells Fargo, Fidelity and Scottrade, the site’s direct competitors. A couple of sites, namely Interactive Brokers and LightSpeed Web Trader, do have lower commissions, but these sites have significant starting deposits which Sharebuilder does not. Anyone can begin investing in Sharebuilder with no minimum.

The connection Sharebuilder has to Capital One is also a useful one. While there can be an advantage to using an online service that has no connection to face to face advisors, some will be reassured by the links here. It is possible to carry out trades on the phone with Sharebuilder, not the case everywhere. Furthermore, you can connect a Sharebuilder account to a checking or savings account with Capital One, making trading easier. When you set up automatic deposits, you also save significant amounts of money.

The Express Funding features Sharebuilder offers is also almost unique. It means you don’t have to transfer funds to your account specifically in order to buy shares: this tool lets you use your active bank account to invest, up to a value of $5000, without having to move money back and forth.

Sharebuilder’s useful apps that work across all platforms are also a significant advantage.

Still, like all similar websites, Sharebuilder does have its disadvantages. There are certainly customer service staff available at Sharebuilder, which is more than can be said for more automated platforms. They are available in office hours beetween Monday and Friday, and have been reviewed as generally knowledgeable. However, these real people are not available to answer questions 24 hours a day, as would be the case at some full service brokerages, like Fidelity and TD Ameritrade. This means the user needs to decide what they want: low fees, or the convenience of having real people on hand at all times to advise about portfolios and investments.

Unlike Fidelity, too, Sharebuilder does not allow the user to purchase bonds individually. Ostensibly this is to reduce risk and remove the added complexity of buying bonds one at a time, but some more experienced investors find this hampers their ability to design their own portfolio. Those who are less experienced, however, will probably not find this too concerning.

Perhaps more problematic is that it is not possible for users of the site to get in on an increasingly popular investing activity — currency trading. Forex markets make it possible to buy and sell any common currency, and some services such as TD Ameritrade will allow this. If you’re interested in this kind of trading, Sharebuilder may not be for you, although many other brokerages also do not offer this option. Scottrade, for example, has no forex capacity.

Sharebuilder’s main selling point, then, seems to be its low cost. It offers retirement accounts for both businesses and individuals, which also makes it appealing, and there is no minimum funding balance. All these elements, however, define Sharebuilder’s main audience: more inexperienced traders. Low commissions and convenience are key to these users. If you are just getting into trading, Sharebuilder is a reliable and low cost option. If you have more experience, however, you may wish to look elsewhere.