Not as good as it first seems
Written: Aug 29 '02 (Updated Aug 30 '02)
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Pros: dollar cost averaging is a good idea, nice website
Cons: high fees to sell and transfer your $ back to you
The Bottom Line: Dollar cost averaging done right can be very sound investing, but I would only recommend Sharebuilder for those who will not need to move/sell for a long period of time.
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| meetvirginia's Full Review: Sharebuilder |
Last year I had about 10 email ads showing smiling couples and saying how easy it is to invest using Sharebuilder. Never being disciplined enough to put and keep my money anywhere else than my checking account, I took a look at their website and was generally impressed by how easy it seemed to have an account with them. I opened an account and was right, having a Sharebuilder account is the easiest investing I have ever done. Every month they would withdraw a set amount from my checking account and invest it in my prepicked stocks. I would never even miss the money. Easy!
However, easy does not always mean good. I first want to say that in no way did I feel misled or that I was scammed or anything like that. Although they did raise their fees soon after I opened my account, I knew all the fine print and went into this with my eyes wide open. As we've all learned somehow, mistakes can often be made with your eyes wide open though.
For one year, I allowed Sharebuilder to invest for me and I only ocassionally checked out how it was doing. All was fine until one day I checked in on my portfolio to see that 2 of the large, well known companies I had stock in had split into smaller companies. The shares I owned in these companies were split in odd proportions and I now had .31 (yes thirty one cents) invested in one company and under $2.00 in another. Because these small run off companies were not ones I would choose to invest in, I would never have more than that. This would not be such a problem if I didn't want to close my account.
First let me tell you why I wanted to close my account. As one reviewer said Sharebuilder makes money off your trade. I know that other brokers do this and have never had a problem because it is never at the customers expense. When you put in an order at a huge brokerage co. they have many ways to give you the current, best price while still making from .25 to a dollar off of each share, not incl. commissions. (You can do a search online to learn more about this.) But Sharebuilder doesn't even do that. They put the stock in your account at the worst level of the day, and when you sell, they get you out at the worst possible point of the day.
Another reason I wanted to get out was because I finally sat down and figured out that dollar cost averaging was only working for me if I didn't include the monthly Sharebuilder fees and the fees I would pay if I sold. It is still important to figure these into the equation even if you are not looking to sell in the near future.
Overall I realized that my money was only doing well for Sharebuilder and really wasn't getting me anywhere. Hence, the urge to move it or sell it.
Here's the problem though. That stock that I have .31 cents in, it will cost me $15.95 to sell that. That $2 stock I now have, another $15.95. Plus another $30 fee for them to transfer these funds back into my checking account! That adds to $62 I must pay to get under $3 out of my account. Not to mention that the market just has not been nice to anyone's portfolio lately, including the rest of mine. I cannot close my account until I sell all these stocks. Ideally I would not want to sell, and hang in there for years to come and eventually I will break even, but to let my money sit there in a useless account really seems foolish. Yet that is what it is doing until I figure a different way out.
Overall, I cannot think of anyone I would recommend this to. I really feel that this company preys on middle of the road people like those check cashing places. There are so many easy ways to invest and it is very competitive out there, everyone wants your money these days. Even in a great market environment, my money would have been better off in my checking account.
Recommended:
No
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Epinions.com ID:
meetvirginia
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Location: Pennsylvania
Reviews written: 12
Trusted by: 0 members
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