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Low-cost Stock Investing
Date added: June 9th,
2005
By Chris Stallman
| E-mail
Okay,
so you want to start investing but you don't have a whole lot of
money. Don't worry, you're in the same boat as most young
investors. Just because you don't have a whole heck of a lot
of money to invest, it doesn't mean it's not impossible. In
fact, there's an online brokerage company that is great for young
investors: Sharebuilder
Sharebuilder
is an online brokerage that supports long-term investing through
making regular investments. The company allows investors to
buy and sell shares of stock by making regular contributions into
your investment account. For example, this would be like having
$50 automatically deposited into your investment account from your
bank account each month. But this doesn't mean you can't make
one-time investments...because you can do those too.
We think Sharebuilder is a pretty good fit for young
investors, or really any investor new to the stock market.
And here are a few of the reasons why:
No Minimum Investment
With Sharebuilder, you
don't have to have to have thousands of dollars to open an account.
If you only have $50 and want to get started, you're more than welcome
to set up an account and get started buying shares of stock.
You Can Buy Fractions of Shares
This is great because you don't have to worry about
saving up to buy one share of a stock that costs $200. Instead,
you can invest $50 and buy 1/4 of a share. This gives young
investors with less money lots of flexibility to buy stocks, regardless
of the price.
Lower Commissions
You can buy shares of stock for as little as $4
per trade, which is substantially below the $10-15/trade most online
brokers charge. Saving money on commissions can certainly
add up over the long haul.
It Supports Long-term Investing
Sharebuilder makes it easy to set up a long-term
investing plan. It's very easy to have a fixed dollar amount
deducted from your bank account each money in order to start building
portfolio one month at a time.
Some Downsides
Like all things
in life, Sharebuilder isn't perfect. While we think it's a
great company to open your first investment account, it's important
to recognize that there are some downsides. Here are a few
things to keep in mind:
Trades Executed Weekly: In order to get the
$4 commission per trade, you have to wait longer than you might
expect to buy or sell a stock. The reason is because Sharebuilder
saves money by grouping its orders and making all of its purchases
at one time. So only do this if you're comfortable waiting up to
a week However, even if you're not comfortable with this,
you can still pay extra and have your orders completed immediately.
Commissions still add up: Even though the commissions
are below most other online brokers, it's important to realize that
your commissions will still add up, particularly if you're investing
a small amount. So if you're buying $25 worth of stock at
a time, that $4 commission will represent a 16% chunk your investment!
We think Sharebuilder is great for young investors
but only open an account after you've weighed all of the advantages
and disadvantages of doing so. If, after doing this, you're
still interested, you can sign up for an account by clicking this
link:
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