Sharebuilder IRA Account Review

May 7th, 2008  |  Published in Investing  |  1 Comment

Sharebuilder, owned by is one of the best online banks, is a popular broker that has offered a handsome new account promotional bonus for as long as I can remember (current bonuses run in the $50 range). This begs the question, would they make a good place to hold your IRA’s?

Sharebuilder made a name for itself for $4 trades if you were willing to wait until Tuesday for the transaction to execute. For many years, a real-time trade was not an option until recently, when the price was set at $9.95 a trade (which is still pretty cheap but not $4.95 at TradeKing). That being said, if you’re buying for the long haul or you’re buying on a set schedule, you don’t need real time trades because the Tuesday buying schedule will work just fine.

Here are the other benefits of Sharebuilder:

  • Free dividend reinvestment – This is where they got their name, share builder, and one of the best reasons to join Sharebuilder. Rather than having the dividends sit in cash after they’ve been paid out, you can elect to have free dividend reinvestment and build your holdings. This is a feature that many offer nowadays but was novel back in the days Sharebuilder started.
  • Fractional ownership – When they first started, it wasn’t possible to buy fractional shares and Sharebuilder gave you that option. In fact, back in the days before the internet, you couldn’t even buy odd lots (shares that didn’t number in round 100’s); however Sharebuilder gave you the option to buy 1.5 shares or 100.3 shares.
  • Scheduled purchases – The $4 trade fee applies to transactions schedule on that Tuesday, likely to assist in bulk purchases, but it also let you de facto schedule your purchases every month at a set time.

Overall, Sharebuilder, now a subsidiary of ING Direct, is certainly a great place to turn to if you are of the buy and hold mentality and have little to invest.

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The 151st Carnival of Personal Finance is up at the Alpha Consumer, please check it out! My post about the difference between lifestyle and life-cycle funds was listed this week.