ShareBuilder Getting Flexible?

One of the problems I have with ShareBuilder, also one of the reasons I decided to leave ShareBuilder, is its lack of flexibility when it comes to choosing when to invest and how to invest. For instance, at the time when I joined the program, I could only select to invest on the first Tuesday of the month from my basic plan (one that without subscription fee) and the longest interval between two consecutive investments is one month.

No doubt ShareBuilder brought in a fresh concept in helping investors build their portfolios with small, but regular, amounts at relatively low costs. However, offering bi-weekly or even weekly automatic investment plan while charging $4 commission for each transaction just doesn’t make sense to me. If I only have $50 each month to invest, I’d rather wait four months when I have $200 and invest it in a “lump sum” and pay $4 fee than losing more than 8% immediately every month. Though it can be done manually to slow the investment frequency, such method loses the “automatic” feature of the system as I have to remember to fund the account myself.

Two days after being told my account transfer is in progress, I got another message from ShareBuilder, which informed me changes are underway at ShareBuilder. One of them seems addressing the concern I have above:

Accumulate funds in your Money Market and Invest Automatically. Now you can pre-schedule to invest a specific dollar amount once you’ve built up enough cash in your ShareBuilder money market account – automatically. For instance, you can set your automatic investing plan to deposit $25 into your ShareBuilder account as frequently as you’d like (i.e. weekly, monthly, etc.) and after you’ve saved $100, $200 or $500 you can have your plan automatically invest that amount into the stocks of your choice.

With this improved automatic investment scheme, you can reduce the cost of each transaction by setting a higher target investment amount. For example, you can still save $50 a month, but only invest the money once you reach $200. That will reduce the cost to a little over 2% instead of 8% in the previous example. During the accumulation stage, your money will be in ShareBuilder’s money market account which currently pays a 4.47% 7-day yield. In addition, investors now also have more choices on the investment date. Being added are the 1st and 15th of the month.

I feel these new improvements will give investors more control on how to invest their money and help bringing down the costs. Actually, if they announced the change last month, I mighty have a second thought on moving to Zecco. Too bad!

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