Last month, ING Direct acquired ShareBuilder, a discount online brokerage. The two companies seem to make a good pair, so I think it was a good move for the company.
ShareBuilder has now lowered the commission charged for real-time trades to $9.95. Automatic investments, orders which are grouped together with many customers and executed as many as 7 days later, are still $4. Low prices make dabbling in the stock market more appealing to novices. Lower prices are always welcome, but is this a good thing? Personally, I’ll stick with my buy-and-hold strategy and wide diversification among stocks.
A few years ago, ShareBuilder was offering sign-up bonuses, so I used some free money to buy an ETF and two stocks, IYZ, MSFT, and AKAM. I can’t say that any one of these options has shown stellar performance since I placed the orders. This “play money” is only a small fraction of my investments.
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I may actually start using my Sharebuilder account again since they’ve lowered commissions.
That’s a good move. My only problem with Sharebuilder has been that they encourage small investments and a $4 charge on $100 or less is quite large.
Even at $9.95 it’s tough to swallow unless you’re placing large orders. Like Eden said – investing $100 or $200 at a time doesn’t make any sense if 5-10% of your money is instantly eaten by commissions. And of course you get to pay again when it’s time to sell – making it even tougher to swallow.
no-load Mutual funds are the way to go for small investors, I think. At least until you have enough to buy larger amounts of individual stock.