What's it like to invest with Sharebuilder?

Working With Sharebuilder

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Working With Sharebuilder?

Being a single mom of three girls, I have struggled, and my credit score is bad. I would like to start investing with the little money I have with Sharebuilder. Can a person with bad credit open up a ShareBuilder account? Also, how is Sharebuilder to work with? What experiences have readers had?

It's Easy and Painless

Yes, you can contribute to ShareBuilder, even with bad credit. The great thing about Sharebuilder is you can set up an automatic investment withdrawal from your checking account. I have poor credit, and I currently put in $30 a pay period. I have watched my "latte money" turn into a nice emergency fund. I would caution you to try to take some of your money and put it towards items that can boost your credit score, such as debt repayment or a secured credit card (used responsibly of course). I must say I have always had a hard time saving money, and Sharebuilder has allowed me to do that painlessly. The hardest thing is to pick well performing stocks. I haven't sold any of my shares, because my stock picks have been performing better than I expected. Overall, it's perfect for the beginning investor. Good luck!

Make Sure to Save for Emergencies First

Your credit score should not affect your ability to open a ShareBuilder account, because you are not borrowing money; you are investing what you already have. However, if you have only "a little" money, I strongly urge you not to invest it this way. Instead, keep it somewhere safe and liquid, like a basic bank account. This is the money you'll have to draw on in an emergency, and you don't want to put it at risk in the stock market. Financial guru Andrew Tobias advises folks to stay out of the market until they have paid off all their credit cards and have at least $5,000 in the bank. (The online bank that's tied to Sharebuilder, known as ING, offers a savings account with 1.1 percent annual interest, which is not much, but about the best you can do in this economy.)

If this does apply to you, and you still have a little extra to invest, then I would go with Sharebuilder's most basic, low-level account. It has no monthly fee and costs $4 for each trade you make. Then I would pick the fund you want to put your money into, make the investment, and avoid making additional trades. I did this a couple of years back with a couple thousand dollars that I wanted to invest in green energy. I put the money into a green energy fund and just left it there, so I've never paid a penny in fees beyond that initial $4. However, the stock itself is now worth about $1750, so instead of making money on this investment, I've lost money. That's okay, because it was money I could afford to lose, and it's supporting a sector I want to support. If this is all the money you have for emergencies, do not put it in the stock market, because you could lose it all.

Don't Invest What You Can't Afford to Lose

I am a small investor and use ShareBuilder. It is a very useful tool, but each trade is about $10. That's pricey, so I use it for long term investment.

If you want to invest in stocks, be aware that it is a gamble and never invest what you cannot afford to lose. Second, you need to have excellent advice unless you really know what you are doing. I have a Motley Fool membership and have learned to heed their recommendations. Not every stock pick does well, and in the wild market we have, prudence is our best skill.

All in all, it is better to have liquid savings first. We hear this all the time, and I have been really glad I did, as the hospital I worked at suddenly closed. With year-end expenses like Christmas, property taxes, and house and car insurance all at once, savings have been a great blessing. Please establish a small savings program. A twice a month automatic deposit into a savings account can be small and will build surely. When your budget is used to that, save a bit more. It's the best habit you can have financially.

Get In for the Long Haul

I know exactly what you are talking about. My husband and I do not have the best credit either (putting it mildly), and we signed up for ShareBuilder. We have been very happy with it. We have a set amount transferred every payday, and in two years time, we have built up a nice little chunk. We have enjoyed picking our own stock and watching them over time. We've been fortunate in our picks. The site is user friendly and geared for the average person to use readily. They do charge some fees, so look over their fee schedule carefully to determine which route is best for you. It can be very inexpensive. Don't plan on withdrawing frequently as those fees add up. If you can get in it for the long haul, you'll find that the investing fees are minimal, and you can build a nice little nest egg.
Jennifer in Monrovia, CA

Sharebuilder Can Be Expensive

Sharebuilder is a really expensive way to invest in the long run. Those seemingly small fees add up over time. Look into opening one or more DRIP (dividend reinvestment plan) accounts. Some DRIP accounts are better than others are. Many will not charge you any fees at all after the initial investment.

Sharebuilder Did Not Work for Me

Sharebuilder did not work for me as a single person. I seemed to be building it up so slowly, and after I opened the account, I realized that I needed to use the money in other ways. In the end, I closed the account and started using the money to make extra payments on my mortgage and to purchase U.S. Savings Bonds in small denominations. Times ahead may be rocky for investors with lots of ups and downs. Spend a day at your local library reading magazines, such as Fortune, Money, and Wall Street Journal. Ask yourself how upset you will be if you lose money.

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