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Planned Investments: A Review of SogoTrade, ShareBuilder, and MyStockFund

Posted by Sun on February 13, 2007
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The first planned investment service I have heard of and used was ShareBuilder, which was also the only brokerage other than Scottrade I used back in March 2006. The reasons I decided to open an ShareBuilder account (eventually, I got three of them for both me and my wife) were:

  1. Promotion bonuses: I collected a total of $155 of bonuses with three accounts;
  2. Low commissions: $4 per scheduled trade is quite low compared to what Scottrade charges me ($7 per trade);
  3. Commission rebates: Since I signed up the account through Costco, I get 25% quarterly rebate on commissions which reduces the commission from $4 to $3 per trade.

Since then, I have noticed that there are at least other two firms also offer planned investment services: SogoTrade and MyStockFund, and used QQQDirect, a division of MyStockFund, later last year to make fee-free monthly purchase of QQQQ. So how are the two alternative planned investment services different from each other? Let’s take a look.

MyStockFund

MyStockFund offers three fee-based planned investment services (fees can be paid by credit cards) and all planned purchases are made on Thursdays, which is similar to what ShareBuilder offers.

  • Basic plan: $5.98/month that includes 2 purchases, plus $2.99 for additional purchases
  • Flex plan: $59.99/year for $1.99/purchase
  • Diversified plan: $39.99/year for $0.99/purchase, plus $9.9o monthly fee which include 10 free planned purchases
  • Real-time orders: $12.99 for both buy and sell
  • Dividend reinvestment: Free
  • Inactivity fee: None
  • Account transfer out: $50, another $50 for close account and transfer shares out
  • Close account: $50 plus $12.99 real-time sell charge
  • Fractional shares: Yes
  • Account minimum: No
  • Account funding: Electronic
  • Retirement accounts: No
  • Incentives: Use promotion code SMDIRECT to get 5 planned purchases each month for a flat monthly rate of $4.95 for a year with the first month free

SogoTrade

In addition to two subscription based automatic investment services, SogoTrade also has free service with low commission. And their automatic investment is much more flexible than those of ShareBuilder and MyStockFund. Basically, the automatic investments can be made on any given days.

  • Bronze plan: $3 flat fee for both automatic purchases and real-time orders, no monthly fee
  • Gold plan: $10/month subscription fee that includes 5 commission free automatic investments, $2.00 per order for additional purchases and real-time orders
  • Platinum plan: $15/month subscription fee that includes 15 commission free automatic investments, $1.00 fee for additional purchases and $1.5 for real-time orders
  • Sell: Real-time fee applies
  • Dividend reinvestment: Free
  • Inactivity fee: None
  • Account transfer out: N/A
  • Close account: N/A
  • Fractional shares: Yes
  • Account minimum: No
  • Account funding: Electronic
  • Retirement accounts: No
  • Incentives: $1 per trade for the First 90 days for both real-time and automated trades

A quick comparison of ShareBuilder, MyStockFund, and SogoTrade shows that SogoTrade offers the lowest commissions for both the scheduled and real-time trade, buy or sell. However, the biggest drawback is that it doesn’t offer dividend reinvestment. On the other hand, if you plan to buy stocks or ETFs more than once every month, then the basic plan from MyStockFund seems to be a better choice than ShareBuilder’s basic plan which charges $4 per trade. If you are looking to purchase stocks or ETFs in an retirement account with low commission, then ShareBuilder is the only place to go, at least for now, as the other two don’t offer retirement accounts.

BTW, if you are looking for information on other brokers, check my reviews of some of them, including popular firms such as TradeKing, Zecco, Scottrade, and Firstrade:

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8 Comments
February 13, 2007

Sun,

Is the Roth IRA through Sharebuilder a good plan, or too expensive with the $35 annual fee? Monthly investments (12 X 4 = $48 + $35 = $83) I think Vanguard may be cheaper, but they require a $3000 minimum investment. The Sharebuilder Roth IRA may be good for a young investor without a lump sum of money, but I don’t know if the fees are too high. $83 a year seems high to me for Roth, but I haven’t done a comparison.

Thanks,

Mark

Posted by perkinsm
February 13, 2007

Zecco.com is another one.

Im a long investor with sharebuilder.com I never thought to invest in other companies, I guess because I just used of sharebuilder.

Im sure by 2008 there will be plenty more companies to choose from.

Posted by Moneymonk
February 13, 2007

Mark: Regarding Sharebuilder, I think it’s only good for stocks and ETFs which you have to pay a commission when you buy. If you are interested in mutual fund investment in Roth, then go directly with the fund company is a better choice in my opinion. Also we don’t expect to make a lot of trading in an IRA account, therefore paying a monthly fee doesn’t make too much sense to me unless you want to make frequent trading of stocks. Generally, I think these automatic investment plans with reduced commission fees are good for stock/ETF investments, not good for mutual funds. As for Vanguard, they have the $3000 minimum as well as $10 annual fee for funds with less than $5000 assets. But their ERs are among the lowest (if not the lowest), which is definitely a plus for long term investment. If you are considering a Roth account with Vanguard, maybe you can start with only one fund (total market of S&P 500) with a lump sum of this year’s limit ($4000), then start another one next year to minimize the cost.

Moneymonk: Zecco is a little different because they just don’t charge anything and don’t require you to set up an automatic investment plan to get lower fees was the other three do. However, it seems Zecco keeps changing their fee policy. I think it’s better to wait a little longer to let things settle down before jumping in.

Posted by The Sun
February 13, 2007

well u can start with investing in vanguard’s Star fund that requires a 1000 minimum.

Been with Vanguard for 3 years and havent looked back.

Posted by yabadaba
February 15, 2007

I didn’t check all the Vanguard funds, only feel that they generally require a $3000 minimum (I know a couple of other funds require much higher minimum), but it looks like VGSTX is a good exception. I also like Vanguard funds for the low costs and solid performance. Four out of my five mutual funds in IRA account are Vanguard funds.

Posted by The Sun
September 20, 2007

I have a Roth IRA with Sharebuilder, there is no annual fee the 1st year, just the normal investment monthly plan fees. I’m a bit wary of some of these other firms because they haven’t been around very long. I’ve read a lot of complaints about Zecco, poor customer service, inability to execute trades, I’d steer clear. Also I started with ETrade and quickly bailed, it took a week to clear my ACH transfer, and then another week before I could start trading, it seems like they wanted to float my money for short term interest before releasing the funds for trading. I closed the account before even placing a single trade.

Posted by CNM

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