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Why Choose Sharebuilder?

Posted By Jim On 12/09/2009 @ 12:25 pm In Investing | 24 Comments

Before investing in the stock market was opened to the masses with brokers offering cheap stock trades [3], Sharebuilder was the only one with a commission in the single digits. Four bucks was all it cost to buy a stock, as long as you were willing to schedule your purchase ahead of time (the following Tuesday). Real time trades cost you $9.95, which puts it on par with the more “expensive” discount brokers. Any sale of stock was considered a real time trade so the total round-trip commissions would cost you $13.95.

Since then, there are close to a dozen brokers offering stock trades for less than $10 a trade, buy or sell. The slight competitive advantage Sharebuilder once had was now gone and I’m wondering why anyone would choose Sharebuilder?

Commissions

Ten years ago, this was considered cheap. Back then, brokers would routinely charge you $15 a trade. However, today, there are several brokers that charge less then $4 a real time trade. OptionsHouse [4] charges a flat $2.95 rate with no catches or gimmicks. TradeKing [5], frequently lauded for their customer service, only charges you $4.95 a trade – $9.90 round-trip. Zecco does it for free if you meet some of their qualifications, though they’ve received some bad press about their customer service (as they say, you get what you pay for).

Dividend Reinvestment

Years ago, free dividend reinvestment was only available with mutual funds or through direct dividend reinvestment programs (DRIP). Sharebuilder was one of the first brokers to offer free dividend reinvestment but now everyone offers it for free. For example, TradeKing can automatically reinvest dividends on the dividend payable date as long as the security is DTC eligible.

Regular, Automatic Investments

The last benefit Sharebuilder offers is regular automatic investments on a weekly, bi-weekly, or monthly basis. This is probably one of the only things that Sharebuilder does that no other pure stock broker offers (that I’m aware of). You can schedule purchases, at $4 a piece, the same way you can set up regular transfers at an online bank. Mutual fund companies, like Vanguard and Fidelity, offer this and it’s usually commission free if you buy their funds.

Short of taking advantage of the free money offers using a Sharebuilder promotion code [6], I’m not sure Sharebuilder makes much sense anymore. What used to separate them from the competition is now common among discount stock brokers and they never innovated to keep up.

Am I missing something?


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[1] Tweet: http://twitter.com/share

[2] Email: mailto:?subject=http://www.bargaineering.com/articles/why-choose-sharebuilder.html

[3] brokers offering cheap stock trades: http://www.bargaineering.com/articles/cheap-stock-trades-discount-stock-brokers.html

[4] OptionsHouse: http://www.bargaineering.com/articles/r/optionshouse.php?tag=SharebuilderIrrelevant

[5] TradeKing: http://www.bargaineering.com/articles/r/tradeking.php?tag=SharebuilderIrrelevant

[6] Sharebuilder promotion code : http://www.bargaineering.com/articles/sharebuilder-50-bonus-revisit.html

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