Sharebuilder: An Affordable Way to Purchase a Small Number of Stocks?

[toystoryduo]

I'm hoping someone can shed some light on this for me.....My head is spinning in confusion right now.

My DH and I want to purchase a few stocks. We don't have any investments except real estate and want to start a portfolio. It is very confusing for me so a friend recommended ShareBuilder as a way to start. Even that is a bit confusing to me. Can someone describe how ShareBuilder works? Do you think it's a good way to buy a few stocks? Any information is appreciated.....

 

[Maliki2]

I've been using Sharebuilder (well under new name now), for a few years now...I'm not a big purchaser, so I dabble here and there and Sharebuilder is excellent for that! PM me with questions!

 

[toystoryduo]

Basically, I'm not sure how the whole thing works. I set up an account and they take out a specific amount each month or week to purchase stocks on my behalf. Is that correct? Can I purchase whatever stocks I want? Is there a set amount that has to come out each month or is the amount based on how much the stocks cost? What are the fees that are involved? Do we receive paper stock certificates? Sorry for all the questions....

 

[moppety]

Another site thats out there is TradeKing. That's where I have a trading account.

Basically you open an account (free). You transfer money in from your bank account whenever you want. It's not an instant transfer, so there's a little lag time. There's no regular monthly deposit or anything, just transfer what you want, when you want.

You can buy any number of shares, only $4.95 a transaction. It's a pretty good deal. They have lots of help and info available, and many tools to help you with your decision making.

We have my husband's SEP there too, they have many types of accounts available.

Also, these days you don't get paper stocks unless you request them directly from the company that you bought the stock in.

 

[new englander]

Check out DRIP. You can also buy stocks directly from the company. I've been buying Disney stocks every month thru auto pay from my checking acct. and will be doing it the same way with McDonalds. My coworker buys Tiffany, Wellsfargo and Microsoft every month.

 

[toystoryduo]

Thanks for the information!

 

[SuzanneSLO]

To the OP: You didn't ask for a advise about diversifying your investments outside real estate by dollar cost averaging into individual stocks, but I wanted to share my own expereince with you.

We also decided about 8 years ago to purchase individual stocks and, after looking at Sharebuilder (and similar companies), decided to buy 4 stocks thru a DRIP directly from the companies. As a group, these stocks have underperformed the market, but I still own them (now about 2% of our portfolio) to remind me that picking individual stocks is no sure path to great rewards.

Eventually, we sat down and wrote an Investment Policy Statement that outlines why we are investing, what our expected return is and what asset classes (stocks, bonds, cash, etc.) we are investing in our attempt to achieve these returns. With our ISP, we now have a map and are much more satisfied with both the process of, and results from, investing.

I encourage you to write a plan before you commit funds, especially in a taxable account where heading in the wrong direction can be costly to fix.

Best of luck -- Suzanne

 

[Maliki2]

Sharebuilder is $4 trades thats why I use them. I dont buy stocks weekly but once every month, and the one time fee is $4. Of course you can go traditional also if you really want to.

 

[IluvKingLouis]

I'm a retired stock broker and here are my two cents.

If you are buying stocks for entertainment value, then $4.00 is a good deal. But how much are you investing at a time? $100? Then that's a 4% load and considered high.

If you are investing in your future please consider no load (no 12B1 fee) mutual funds. Virtually 100% of your money gets invested (something like 3/10ths of 1% might go to overhead).

Schwab has an excellent mutual fund service with thousand of funds to choose from. Check out the other discounters as well. I like index funds as they tend to be insulated from emotionality. I completely stay away from loads (front end AND back end) and 12-b1 fees (those fee's go towards marketing and advertising).

Dollar cost averaging is a terrific strategy and you can set it up so it happens automatically.

Good luck!

 

[ClarabelleCowFan]

I'm a retired stock broker and here are my two cents.

If you are buying stocks for entertainment value, then $4.00 is a good deal. But how much are you investing at a time? $100? Then that's a 4% load and considered high.

If you are investing in your future please consider no load (no 12B1 fee) mutual funds. Virtually 100% of your money gets invested (something like 3/10ths of 1% might go to overhead).

Schwab has an excellent mutual fund service with thousand of funds to choose from. Check out the other discounters as well. I like index funds as they tend to be insulated from emotionality. I completely stay away from loads (front end AND back end) and 12-b1 fees (those fee's go towards marketing and advertising).

Dollar cost averaging is a terrific strategy and you can set it up so it happens automatically.

Good luck!

Just curious, what is the minimum needed to invest in mutual funds in order to use a brokerage firm like Schwab? Can you set up a plan like Sharebuilder where you can have X amount transferred out of your bank account each month?

 

[IluvKingLouis]

Most of the Schwab proprietary funds have an initial min of $100.00 and subsequent purchases can be as little as $50.00 --- sometimes less. Yes, you can set up for an automatic reinvestment program.

In the spirit of full disclossure, I worked for them for almost 10 years. Great company.

 

[ClarabelleCowFan]

Most of the Schwab proprietary funds have an initial min of $100.00 and subsequent purchases can be as little as $50.00 --- sometimes less. Yes, you can set up for an automatic reinvestment program.

In the spirit of full disclossure, I worked for them for almost 10 years. Great company.

Thanks for the info. I'll have to look into that.