Capital One Sharebuilder Review

When it comes to picking the right brokerage account, the type of trader you are is crucial in your decision. Capital One ShareBuilder is an online broker that is part of the same parent company of ING.

Capital One ShareBuilder was created to make automatic online investments through automated withdrawals from your existing accounts so that your savings will grow automatically.

What’s all that really mean?

You don’t have to sit and worry about which day you’re going to invest money. You set up an automated plan, sit back, and watch your retirement account grow without a lot of checking in from you. It’s an easy, low-hassle way of starting to invest.

It’s very similar to the way that an IRA or 401K is managed by your financial advisor. Instead of investing once or twice per year, you build up a habit through consistent investments.

This is also a great way to start investing for new investors that have never traded stocks or invested in mutual funds. You are taking the thinking out of investing.

Set the plan, engage the automatic investments, and go back to worrying about the rest of your life.

Looking to get started with Capital One ShareBuilder today? Open an account and get a $50 account bonus for free.

Automated Withdrawals with Capital One ShareBuilder

Automated withdrawals can be used to your advantage in many different ways. For example, if you have ever owned a 401k or IRA, you may have noticed the deduction when you receive your pay stub at the end of your pay period. Your financial advisor set this up so that the deduction goes straight into your IRA or 401k which is typically a collection of mutual funds. These mutual funds are all made up of individual securities which commonly are shares of common stock. What Capital One ShareBuilder has created allows you to do the same thing except you are in control of your investment activities.

You can set up this automated withdrawal from either an existing checking account, a deduction from your paycheck, wire transfer or by simply mailing a check. Upon setting up your account, you get to decide the frequency as well as the amount of these withdrawals’s which will be automatically transferred into your ShareBuilder account.

For example, if you receive$1,000 check bi-weekly, you can opt for $200 to be automatically invested into Capital One ShareBuilder. ShareBuilder will take your funds and purchase shares in whatever stock, ETF, or mutual fund of your choosing and automatically invest the dollar amount. This gives you the opportunity to buy partial shares so that you can put the entire $200 in your account to good use immediately.

At the most simplistic level, this is essentially creating your own IRA or retirement fund that you personally manage. The fees that you will be assessed depend on the account level you sign up for.

Different Accounts That Capital One ShareBuilder Offers

Capital One ShareBuilder offers two different account levels. They offer a Basic Plan and a subscription based Advantage Plan.

The Basic Plan has no monthly fee so it’s free to start. When using the automated investment method with the Basic Plan, you will be assessed a $4 fee for every automated transaction, as well as $9.95 for all real time trades. You can trade Options with the Basic Plan as well for $9.95 per trade + $1.50 per contract.

With the automatic investing option you can limit the cost of your trades for stocks and ETFs to just $4 per investment. That is among the lowest in the industry.

The next step up is the Advantage Plan. With the Advantage Plan you pay $12 per month and receive 12 automated investment transactions per month for free. All automated transfers after 12 per month will be assessed a fee of $1. If you need to make a real time trade (rather than on an automated schedule) the fee will drop to $7.95 ($2 less than on the Basic Plan). Option pricing also drops $2 to $7.95 per trade plus $0.75 per contract. Capital One ShareBuilder also kicks in premium research from S&P such as the S&P Morning Brief and a list of research team upgrades/downgrades on stocks.

Essentially if you plan to regularly invest funds more than 3 times per month then it makes a lot of sense to switch to the Advantage Plan. Three automatic transactions under the Basic Plan would cost $12. With the Advantage Plan you get 9 additional automatic transactions for free compared to the Basic Plan. It’s like paying $1 per trade — a price that cannot be beaten with any other broker.

Both account types allow you to invest in mutual funds. The trade costs range from $0 (yes, free) for No Transaction Fee Funds to $19.95 for other mutual funds.

Excellent Research

Like any other broker, Capital One ShareBuilder offers a variety of tools to its customers. They offer screening options for mutual funds, ETFs, and of course stocks. They have your normal market mover and watch list options as well. You can also research option chains and there is a calendar of upcoming IPOs so you can track which ones you want to invest in.

Capital One ShareBuilder also offers easy tax applications to keep track of your gains/losses throughout the year which you can easily export to typical tax software programs. If you trade a lot having clear and concise tax records is a huge benefit when it comes time to file your taxes.

Building a Diverse ETF Portfolio with Capital One ShareBuilder

Whether you are a new investor just trying to figure out how to invest each month or a seasoned investor looking to lower your investment options, Capital One ShareBuilder is a solid choice. Here are two examples of how you can use Capital One ShareBuilder to grow your portfolio automatically.

New Investor: Open a Roth IRA

The best time to start investing is right now. The longer you wait to begin investing, the more you have to save in order to hit your retirement goals.

If you are a new investor that is just trying to figure out how to budget for your retirement, starting with Capital One ShareBuilder’s Basic Plan is a great place to look.  With a Roth IRA you are investing after-tax income from your paycheck. IRS rules limit you to investing $5,000 per year into a Roth IRA. But even if you don’t have $5,000 (that’s $416.67 per month), any amount will help grow your account.

Let’s assume you have just $100 per month to save for a Roth IRA. To make things simple we will invest 75% of your money into Vanguard’s Total Stock Market ETF (VTI) and 25% into Vanguard’s Total Bond Market ETF (BND). If you are just starting out you don’t need to worry about asset allocation as much as you need to worry about actually investing money for your future.

Here are the steps to take to set up that portfolio:

  1. Open a Basic Plan account with Capital One ShareBuilder and get a $50 account bonus
  2. During the account opening process, make sure you select “Open a Roth IRA”
  3. During the investment selection process, choose Automatic Investment
  4. Search for VTI (the total stock ETF from Vanguard) and choose to invest $75 per month with 1 automatic transfer per month
  5. Then search for BND (the total bond ETF from Vanguard) and choose to invest $25 per month with 1 automatic transfer per month
  6. Sit back and relax, you’re done!

That’s all it takes to get started with investing. You will pay $4 per automatic transfer (so $8) for your two investments each month. As time goes on you can increase how much you invest or upgrade to an Advantage Plan to increase the number of transactions you have each month.

Seasoned Investor: Lower Your Trading Costs

If you’re a seasoned investor, Capital One ShareBuilder can still be a big help by reducing your automatic investment costs. (If you are a day trader that is not the plan or broker for you.)

Here are the steps to take to cut down on your investing costs:

  1. Open an Advantage Plan account with Capital One ShareBuilder and get a $50 account bonus
  2. During the account opening process, choose whichever account you need whether it is a Roth IRA, Traditional IRA, or a normal trading account
  3. During the investment selection process, choose Automatic Investment
  4. Search for your investments and how much you want to invest in each
  5. Make sure you choose at least 4 automatic investments each month, otherwise the Basic Plan would be the same or lower cost (3 trades x $4 = $12, which is the cost of the Advantage Plan each month)
  6. Sit back and relax, you’re done!

This plan can save you significantly compared to other brokers. If you had 12 automatic investments each month with Scottrade (another favorite of ours), you would pay $84 in trading fees. With Capital One ShareBuilder that would drop to just $12, a savings of $72.

Conclusion

If you consider yourself to be a day trader, then Capital One ShareBuilder is not the online broker for you. Their real time trades as well as options fees at $9.95 (or $7.95 with the Advantage Plan) are not attractive relatively to other online brokers.

However, Capital One ShareBuilder is a great option if you want to set up an easy automatic investing plan in ETFs, Equities or No Transaction Fee Mutual Funds. By picking these quality investment tools you will be able to set up automated withdrawals from variety of sources to have your account grow steadily while only paying transaction fees ranging from $1 to $4 depending on which plan option you choose.

By setting up your account with Capital One ShareBuilder you will be able to theoretically replace your financial advisor using your own skills and Capital One ShareBuilder’s easy automated system to steadily save for retirement without the approximate 1% fee given to your advisor on an annual basis. Setting up your SharBuilder account will take no more than 20 minutes, and requires no extra paperwork than any other financial account.

Interested in opening an account with Capital One ShareBuilder? If you open an account today they will give you a $50 account bonus.
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