I have long been an investor with Sharebuilder, which is now owned by Capital One. When I used to have a little more free income on hand, I used to “stock” is away in an Automatic investment plan with Sharebuilder, allowing me to purchase any denomination of funds (in my case I went with Exchange Traded Funds, ETF). The program allowed me to invest as little as $1 per week; however, each automatic trade cost $4, so it was more economical to make higher denomination purchases for the same fee.
While purchasing funds with Sharebuilder was cheap via the Automatic investment plans, selling via a market order cost $9.95 per trade. However, in reality, a lot of times per year you can find promotional codes you can add to your account to earn free trades.
For example, some possibly active codes include (I do not know for sure since I may have already applied them to my accounts):
3AIP or 3AIP*GEJZOH (3 free Automatic investments)
SK483GXM2BU9 (5 free automatic investments, expires 12/31/2014)
TAF2RPL*6O52v9
BDAY12AL or BDAY12MR
TAF5AAP*0H10pAE (5 free Automatic investments)
TAF5AAG*0037yC (5 free Automatic investments)
This week Sharebuilder announced reduced fees starting March 1, 2013.
Automatic investment trades will still only cost $4 through the Sharebuilder Basic program.
Market and limit orders will drop from $9.95 to $6.95 each provided the underlying security is priced above $1. Otherwise, there is a $0.007 surcharge per share on market and limit orders. The total commission (base commission + surcharge) is subject to a maximum of 15% of the principal amount of the trade, but no less than the base commission.
Options trades will also drop March 1 to $6.95 commission and $0.75 per contract for all customers.
There are also changes for margin accounts going into effect April 1, 2013, where Sharebuilder moves to a single pricing structure (it is currently based around different plans).
All of the changes are great news for newbie investors who do not really have a lot of money to invest. Sharebuilder makes it incredibly economical to get started saving, even with as little as $1. No amount is to small to start saving for tomorrow.
Save Money, Travel More!
We do not currently have a financial relationship (i.e. affiliate) with Sharebuilder, but use their services to manage some of our financial investments.
This price cut could be the beginning of the end for Sharebuilder. Even at their previous high price and uncompetitive level, which you accurately point out, Sharebuilder had been losing money for years and still does. They have a $40 million accumulated deficit on their balance sheet and every year they borrow another $20 million from their parent company under a “subordinated loan agreement” to cover losses. Currently this sub loan totals $100 million.
Check my facts here: http://www.sec.gov/search/search.htm
Sharebuilder clears their trades through Pershing who has given the online broker their lowest price possible. Sharebuilder’s costs will not go down with any volume increase associated with this price drop. I doubt the cost conscientious Capital One Parent Company will put up with this also ran in a highly competitive low margin business. The only thing the price drop will accomplish is that it will make it less confusing for customers, but Sharebuilder had to do this because they were fined by FINRA $140,000 for False Advertising concerning their advertised prices.
Check my facts here: http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/