Investing

I'm looking for a new broker for my IRA and monthly purchases of an S&P 500 Index fund...

I noticed a message on the Firstrade site that they are changing their mutual fund cost structure and it appears they may start charging me $9.95 for each time I buy a no-load mutual fund like the VanGuard S&P 500 Index Fund (symbol: VFINX). This is much different than the price I had been getting: $0.00 per trade and no yearly custodial fee for the IRA! As a result, I'm evaluating IRA brokers and am curious if anyone out there has a good recommendation? This account would probably handle 1-5 trades a month in the range of $200-$500 per month.

ShareBuilder is an online brokerage offering trades for $4 or less. I've had a personal account with them for about 2 years. ShareBuilder is a great service for investors buying stocks for the longterm who are concerned about how much they spend to buy their stocks or funds.

The low-priced $4 trades are kept so low because ShareBuilder only executes these trades on Tuesdays. By combining the purchases of all their accounts into one day it costs less money per individual. This also means you can invest a certain dollar amount in a stock and own a percentage of shares. For example, one of my first stock purchases was Pepsico (symbol: PEP). If you wanted to purchase this security, you'd setup a one-time trade with ShareBuilder to buy an amount, $1000 for example, of PEP. The trade would then execute on the next Tuesday of the month. This would buy you about 15.52 shares of Pepsi stock-- dividends, voting rights, and all.

There are different kinds of accounts with ShareBuilder that include different price structures and features:

• ShareBuilder Trades (Tuesday trades) can be executed for even lower than $4 for accounts above the basic free account. However, these accounts cost a monthly fee to maintain.


• Immediate market orders can be performed for a higher price, somewhere around $16 for a basic account. This is more expensive than many other online brokers and isn't the ideal use for a ShareBuilder account.


• Additional online tools available for planning and tracking to users with accounts above basic.

One thing to be aware of is ShareBuilder does not offer as many stocks as other popular, but more expensive, online brokers. For example, I would love to increase my holdings in Berkshire Hathaway (symbol: BRK.B) to more than a single share, but at a price of over $3000 per share of class B, it's not all that easy. Being able to slowly buy partial shares of this stock would be ideal, but you can't buy it at all through ShareBuilder. As I haven't bought too many different companies I cannot be sure how many less popular stocks are offered, but I know the popularity and price of the stocks affect whether ShareBuilder offers them. They do, however, offer some IPOs I seem to remember.

Overall, I've been very happy with ShareBuilder over the past 2 years. I get accurate and quick access to my account information and stock research at the ShareBuilder website, a low commission price, e/mails with annual reports and shareholder voter ballots, and an easy way to transfer money to my account electronically. I'd recommend ShareBuilder to anyone looking to buy stocks for the longterm who wants an easy and reliable website with low financial overhead for your investments.