The first online trading firm that I used was Sharebuilder.com. At the time, $4 / trade was a steal. It may still sound like a good price when compared to other brokerages, however Sharebuilder may not be the best choice for some. Let’s look at the pros and cons:

Pros:
Low cost trading ranging from $1 – $9.95
No account minimums
No inactivity fees
$0 trades into online ING mutual funds
Real-time quotes
Automatic trading available
Option trading available

Cons:
Real-time trades $9.95
$1-$4 trades are only executed on Tuesday at a specific time
Must have trade order in by Monday for $1-$4 trades
Must hold mutual funds for 90 days ($19.95 fine if sold earlier)
Option trading $9.95 +

So is Sharebuilder.com outdated? It depends on the type of investor. For a young trader using a custodial account (like myself seven years ago) it is a good cheap choice. Today, some brokerages are offering real-time trades for $4.95 (TradeKing.com). Personally, I would rather be able to sell and/or purchase shares during trading hours whenever I’d like. The extra .95 cents in my opinion is well worth having real-time trades.

However, for investors who are not concerned about when trades are executed and are wanting long term investments, Sharebuilder.com may be the better choice. For example, if you tend to invest $100/week in three different companies you could sign up for Sharebuilder’s $20/month investment plan. In total you would be executing 12 trades per month which equates to under $2/ trade. In this situation it would be better to use Sharebuilder.com.

As more online brokerage firms become available commission fees tend to be reduced. Overall, Sharebuilder.com is still a good choice for some investors but the competition is creating heat on the way they execute their trades.

E.M.