Review of ING Sharebuilder

Recently, about a month ago I decided to open up an account at ING’s sharebuilder.com  I had been curious about those online trading companies for some time now particularly because it seemed like the barriers to entry in terms of investing in stocks was lifted.

After looking into some of them I still had not invested because the ones that I looked into needed a minimum investment of $500 or more. That may be a small amount to many, but for me however, it was still quite a bit. Especially since I’d rather keep the small amount of savings I had/have liquid in case of any emergency or needed expense. I don’t quite live check to check but there isn’t much room for saving.

Okay, anyway I found myself being able to open an account at ING’s Sharebuilder.Below are the reasons why and my review of it.

1.) There are no minimum investments

2.) You can purchase any amount of stock you want or even fractions of a stock.

3.) Money that you transfer into your account that does not get allocated into a stock purchase goes into a money market account. Not bad considering many banks still require a minimum to open a money market account and enjoy the higher interest rates.

So those are the reasons and here is how it works and what I recommend if you decide to use Sharebuilder from ING.

First, there are several options when opening an account. One, there is an option with no monthly fee and with $4.00 trades or a $12.00 recurring monthly fee with up to six trades with the 7th or greater trades being at $4.00  By trades, Sharebuilder means purchasing.

There is also a schedule to buying and purchasing if you want the $4.00 trade to apply. If you want to purchase stock in real time or ASAP outside of your schedule it costs $9.95. Other small fees may apply with certain types of transactions. I can’t recall.

So this is the screenshot of when my money was transferred to INGs sharebuilder. This usually takes about a day or two.

I placed $80 in my account but only decided to invest $70.00 in stock. At the time I was not quite clear if the remaining balance went to the money market account or if it sat there until you opened the money market account. The former is true.

As you can see in the calendar next to the chart, the purple square indicates when sharebuilder will make the orders and the red indicates when the orders will be purchased at their market value.

If I remember correctly, there are 4 different schedules you can set up in terms of investing. The one time schedule, what I did here, will occur at the last Tuesday of every month. There is also a montly recurring schedule, a bi-weekly recurring schedule and weekly schedule. The last three schedule options will automatically withdraw from your account and invest it in the designated stocks or place it in your money market.

For each different company you purchase stock from, you will be charged $4.00 if you go with the fee-less type account.

For example, I decided to invest $20, $30 and $20 in AMD, JAVA (Sun Microsystems) and Vonage respectively. Having placed $80.00 in my account, my net investment after fees should be $68.00 ($10 in the money market $58 in stocks) plus or minus gains or losses. The $58.00 comes from the $70.00 investment minues the $12.00 fee for purchasing stok in the three companies.

You probably noticed that I have fractions of stock in there. Well in a way that is convenient because you can treat this like your mutual fund, but when it comes time to sell, it may not be feasible to get those fractional stocks sold. Also, when you decide to sell, that will cost you $9.95. Buying or selling real time costs just that.

As I mentioned you can create a schedule for your investments. Here is a screenshot of that.

There are also other features you can take advantage of with Sharebuilder. Some include trading stock options and investing in the money market accounts.

You can also research your stocks, that is view stock charts and other nifty data regarding the company you are planning to invest in.

Paid optional features include a portfolio tax tool and gans and losses portfolio viewer.

Personally, I would not pay for these since you can probably accomplish what the gains and losses tool does for you for free via finance.google.com.

You can enter what you paid for the stocks and even fractional amounts of the stocks purchased and it will track you gains and losses. Here are mine at the time of writing this.

You may even be able to create an API for this and have it showing real time on your website or your iGoogle account. In addition, I would rather login to my google account versus my sharebuilder account on a public or friend’s computer to check my investment status.

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My recommendations:

1.) Do not upgrade to the tax tools or profit and losses tools. Sharebuilder will likely have to send you a 1099 at years end anyway for your taxes.

2.) Use Google finance or any other comparable tool to track your gains and losses. Embed any available APIs in your website if you are able to.

3.) Before purchasing stock accumulate a good chunk of cash in your money market account. Think about it, even at $4.00 per purchase, you will pay 10% if you only invest $40.00. It is likely going to take you more than a year to see that money back. So Accumulate a good sum so that you can have a good return on investment and not one that is trying to catch up with the fees you paid. You can have the recurring schedule, just transfer it to your money market account so that it can accumulate.

4.) If you want to create your own mini fund but don’t know where to start, you can always look at what other funds are investing in. In my opinion State Farm has good knowledge about investing and their funds do well. You can go to their site, look at the prospectus of one of their funds and place their some or all of their top 10 companies of their fund in your portfolio. Maybe that’s not being too creative but it’s an option.

In regards to choosing stock, well I didn’t do any reaserch and in fact two out of the three companies I chose are considered bearish, meaning dormant or not likely to perform well. So far, that has been true of AMD. Vonage is the other one but I have faith in Vonage, mainly because I love their product (IP Phone).  Java, I wasn’t too sure of when I made my initial investment but I know that many fine programs are developed in Java, such as data mining and anylitical software. Eventhough Microsoft is as popular as it is, I don’t think these software manufacturers will be switching to a different programming language.

Hope this helps. If you have questions or something is unclear, post and I will reply. =) Hope you found this post helpful.