Are you looking for a discount online brokerage that allows you to trade stocks, mutual funds, and ETFs or even automate your investing? In this ShareBuilder review, we will look at how it is possible to invest without being overwhelmed with too many investment options.
Beginner investors will particularly favor the easy-to-use platform offered by ShareBuilder and it’s parent company, Capital One Investing that allows them to perform basic trades by themselves or with the help of an advisor. Advanced traders looking for a day trading platform will want to look elsewhere.
Investors that want to automate their investing can save some additional money by only paying $3.95 per trade when enrolling in a ShareBuilder plan that makes a trade each Tuesday at least once a month. In addition to individual accounts, small business owners can also offer ShareBuilder 401(k)s to their employees as well.
Brief Overview of ShareBuilder
ShareBuilder is one of the oldest online brokers that originally started at NetStock Direct in 1996. In the 20+ years in existence, ShareBuilder is now part of Capital One Investing.
In addition to belonging to a reputable bank, they also have some of the lowest trade commissions of $3.95 per trade when enrolled in a ShareBuilder Plan and $6.95 for all other trades.
Who Should Consider it
Capital One Investing’s target investors are beginners and those that prefer “set it and forget it” automatic investing plans that only requires a small amount of initial time investment to schedule how much money you want to be invested each month with their automated ShareBuilder plans.
Beginner investors will also like Capital One Investing because it doesn’t have a complex trading platform that other brokerages use, that can make investing feel impossible to understand.
You might also like investing with Capital One if you are a current Capital One 360 banking customer because you already trust Capital One and want to keep all of your money in one location.
You will like Capital One Investing the most if you are a beginner investor that wants to get the lowest trade fees through automatic investing. Advanced traders will find Capital One’s investment choices lacking though.
Likes & Dislikes
- Automatic Investments (ShareBuilder Plans)
- Small Business 401k accounts allow employees to invest in low-cost Vanguard ETFs
- Award winning user-friendly website ideal for beginner & hands-off investors
- $0 account minimum
- Vast research tools and educational support
- Relatively low commissions
- Ability to invest in IPOs
- No trading platform required by advanced traders
- Limited trade tools
- Limited investments offerings – lacks Forex, futures, or individual bonds
- Slow trade execution
- Cannot “short” equities
Capital One Investing offers the normal array of investment accounts that the whole family can use. The normal trading fees, research tools, and support resources are available for all the account types listed below:
- Single or Joint Taxable Brokerage Account
- Traditional IRA
- Roth IRA
- Small Business Tax-Deductible 401k
- Custodial account
- Coverdell Education Savings Account
Unlike other online brokerages, Capital One Investing doesn’t charge an account minimum which is great news for investors just starting their portfolio.
For each trade you simply need to invest more than the cost of the trade commission of $3.95 or $6.95 in most instances, and, select no-load no-fee mutual funds have no transaction fee.
You can purchase (or sell) nearly any stock traded on the Dow Jones or Nasdaq indices that trade in real-time.
Low-priced stocks (“penny stocks”) can also be purchased for a slightly higher trade commission. It’s also possible to setup buy or sell limit orders.
ETFs are quickly becoming a low-cost way to hold a basket of stocks that still trade in real-time unlike mutual funds and usually have fund expenses and fees.
You have access to no-load Fidelity and Vanguard mutual funds, some of the best rated in the world, and can also purchase from a list of no-load no-fee mutual funds that even waive the normal trade commissions.
Capital One Investing allows you to trade basic stock options. You will need to get additional approval for this service.
Initial Public Offerings (IPOs)
If you want to buy a new stock as soon as it goes public like Facebook in 2012, you also have this access through Capital One.
Capital One Investing has a reputation for having low fees and is one reason they are so popular.
With $6.95 per online trade & $3.95 for the automated trades, they are cheaper than other full-services brokerages like TD Ameritrade that doesn’t offer a discount for automated trades.
But, they are still not as cheap as other discount brokers like TradeKing or OptionsHouse that charge a flat commission rate of $4.95 per stock trade for any trading day, not just automated trades.
Stocks, ETFs, and Mutual Funds Fees
- $6.95 for any non-automated trade
- $3.95 for automated ShareBuilder plan trades that must occur at least once a month, and, these trades only occur on Tuesdays
- $0 commission on over 400 no-load no-fee mutual funds
- An additional 500 mutual funds can cost up to $19.95 per trade
$6.95 plus $0.75 per contract to buy or sell a call, put, or covered call.
If you intend to exercise your options, you will pay the following flat fee instead:
- $30 per Early Exercise
- $20 per Automatic Exercise
- $20 per Assignment
- $18.95 per trade when buying or selling a portfolio of 6-8 ETFs that align with your investment strategy.
- $49.95 if you sell a no-load, no-transaction fee mutual fund within 90 days of purchase (except money market funds)
- $19.95 per phone trade
- No charges to reinvest dividends and capital gains or transfer money into Capital One account
These fees are in-line with many of the leading online brokerages meaning you will not pay any more at Capital One to trade as you would anywhere else. In fact, the automated trading can save you money.
If you are a frequent trader with several trades weekly, cheaper platforms exist.
Also, if you primarily want to invest in ETFs and only need access to a particular fund family like Schwab or Vanguard, opening an account directly with that brokerage will allow you to trade the ETFs for free that will Capital One will charge $6.95 to trade.
While Capital One Investing’s platform is known for its simplicity, it does have some unique features that not every brokerage offers.
ShareBuilder Investment Plans
Investing with Capital One is cheapest when using a ShareBuilder account that automates your investing by investing the same amount each day of the month.
While automatic investing isn’t unique to Capital One, discounted trading fees are rather uncommon as many brokerages require a minimum $100 recurring deposit or charge the same fee for any type of trade.
Assuming you make one automatic trade per month, you save $36 per year.
You have to be willing to only have these trades occur on a Tuesday, but, it is a unique approach to helping attract investors to participate in automatic investing.
PortfolioBuilder Investment Plans
When you first create an account with Capital One or any other brokerage, you will be asked to complete an investment questionnaire to help determine your risk tolerance and desired rate of return.
At the end of the survey, Capital One will help recommend a portfolio of 6 to 8 ETFs that best demonstrate your target allocation (conservative, moderate, aggressive) and you can buy that portfolio for $18.95. A savings of at approximately $20 per trade if you purchased each fund separately.
PortfolioBuilder is more cost-effective than buying several ETFs individually, but, other brokerages have introduced “robo-adviser” funds that operate the same without any trade commissions and charge a slightly higher expense ratio ranging from 0.25% to 0.35%.
Of course, these same robo-funds sometimes require a minimum account balance of $5,000 to qualify. The Capital One PortfolioBuilder funds do not have a minimum balance to get started and is still a cheaper option than buying each ETF separately through regular trading.
Now that we have discussed the fees and the investment offerings available, it’s time to talk about how you can start trading with Capital One Investing.
The Capital One Investing platform is the all-inclusive web-based platform for all trades, including the automatic ShareBuilder plans. Making trades is very easy as you choose the stock or fund you want to buy, the number of shares, and click the trade button.
The trade tool will show you a real-time price quote of the stock or fund you wish to purchase. It will also show you how much cash is currently available to trade.
If you do not have enough cash presently, you can also use their Express Funding feature to make a trade and arrange for the necessary funds to be transferred to your account as the trade closes.
As a benefit of the limited trade offerings and the fact that Capital One is oriented for hands-off and novice investors, their website is easy to navigate and you don’t have to worry about making the wrong type of trade (i.e. a “short” sell instead of a regular stock sell transaction).
Remember, to trade options, you will have to receive additional authorization. Once you are approved, you can do basic options trading like calls, puts, and covered calls, but, cannot “short” stocks.
Automatic Investing with the ShareBuilder Investment Plan
The automatic ShareBuilder Investment Plan with $3.95 trades is only available online.
These trades also take place on the Capital One Investing platform and you schedule the trades like the non-automatic trades by simply selecting the following criteria:
- Security you want to trade
- Dollar amount
- Trading frequency (weekly, biweekly or monthly)
All ShareBuilder trades only occur on Tuesday. Any additional trade you wish to perform on other trading days will have a base commission of $6.95.
The Capital One Investing mobile app is available for iOS, Android, and Windows devices. It functions just like the regular website and allows to trade and research prospective stocks and funds.
Overall, the Capital One Investing platform will get the job done for most investors and the mobile functionality is a definite plus as people continue to live life away from their computers.
Surprisingly, Capital One has very strong research capabilities despite not having a full-service trading platform like many other online brokerages.
They use the Morningstar rankings as a baseline and also have many other tools located in their “Research” tab.
Their investment screener lets you quickly sift through the ocean of stocks, mutual funds, and ETFS by looking at offerings with specific Morningstar ratings, investment strategies, commissions, or dividend yields to name a few search criteria options.
This research tool allows you to look at the historical performance and expense ratio of a particular fund. You also find recommended alternatives to the fund you are currently evaluating.
Heat Maps & Charts
Another pretty cool feature are the heat maps & charts that help provide visual research examples. The charts can track historical performance up to 20 years while the heat maps can show you the biggest winner & losers in real-time or over the previous 10 years.
If you are waffling between two different stocks (i.e. Proctor & Gamble or Johnson & Johnson), you can compare the performance and fundamental data of up to 5 stocks with side-by-side columns.
In addition to researching additional funds, you can also view the performance of your current portfolio by analyzing your current positions held and their allocation.
Some research options are standard across all brokerages like the historical charts & side-by-side comparisons, but, other platforms designed for basic investors do not offer these same features.
While fees might be the primary reason you select a particular brokerage, research options can be almost (or more) important.
Part of DIY investing is learning as you walk through the process.
To help you along the way, Capital One Investing has compiled an in-depth knowledge center that helps to explain basic concepts such as how ETFs or a Roth IRA works to trading options.
All the articles are quick reads that will teach you the basics of investing and not feel so overwhelmed when learning how to invest.
Capital One Investing has award-winning support, but, one drawback is that it isn’t available 24/7.
Live chat & phone support is available Monday to Friday, 8 AM- 9 PM ET. Capital One mentions on their website that all calls are answered by real people instead of machines with minimal wait times as well.
You can also contact them via e-mail or search their help center database for after-hours help or to save a phone call for a simple question.
ShareBuilder Review Final Verdict
Capital One Investing is best for beginners and hands-off investors that want to save some additional money through the ShareBuilder automatic investing plans.
The availability to trade stocks, ETFs, and most mutual funds for $6.95 is very competitive. Despite the low cost & relatively small amount of investment offerings, most casual investors will be pleased with Capital One’s trading and research platforms and might not realize the limitations.
Active traders should choose a different brokerage with an actual trading platform, more in-depth research tools, and more investment options from brokerages with cheaper commissions.