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Taking Your First Steps

by Douglas Gerlach


Now that you have a basic understanding about investing in stocks and building a portfolio, it's time to take action. Your investment education doesn't stop here -- there are plenty of books and web sites to keep you busy reading and expanding your knowledge. But opening your ShareBuilder Account is the first step toward making your financial dreams a reality, so get started today.

The ShareBuilder Way

With dollar-based investing, you can purchase fractional shares of stock in your account. ShareBuilder is a simple, flexible, and affordable way to build wealth through long-term investing. Using ShareBuilder, you can make regular, automatic investments in stocks you choose. There's no account minimum to get started, so you can begin investing with any dollar amount. ShareBuilder allows dollar-based investing, so you can purchase stocks by the dollar instead of by the share -- that way all your investment dollars can be put to work when you choose to buy a stock.

There are two ways to invest in stocks through ShareBuilder.

  1. Setup an Automatic Investing Plan: You can allocate a fixed dollar amount to invest each week or each month. These investments are made each Tuesday based on a schedule you set and control.
  2. Place a Real-time Trade: ShareBuilder also offers real-time buy or sell market and limit orders. They are processed every weekday during market hours.

ShareBuilder has three Pricing Programs for automatic plan purchases:

  1. Basic: You pay $4 for each scheduled purchase you make, whether it's a recurring transaction or a one-time purchase.
  2. Standard: For a monthly subscription price of $12, you get up to 6 scheduled investments each month. Subsequent transactions are just $2 each.
  3. Advantage: Make up to 20 investments per month for $20. Subsequent transactions are just $1 each and you get other benefits, including our portfolio tracking and tax tools.

How can ShareBuilder charge so much less than other firms? Each week ShareBuilder collects the orders investors have made through their Automatic Investment Plans and then purchases all the shares in a lump sum. Then the shares are allocated to individual accounts, usually resulting in fractional shares. See our Pricing & Rates.

Choosing the Right Account

ShareBuilder offers several types of accounts. All are designed to maximize the benefits of long-term investing. ShareBuilder general investing accounts include individual, joint, and custodial accounts. Individual accounts are owned by one person, while joint accounts are owned by two people, typically spouses. Both people share ownership of the account and either can authorize trades and withdrawals from the account.

For individuals under the age of 18 or 21 (depending on the state of residence) custodial accounts are available. An adult must oversee the assets in a custodial account for the benefit of a minor until the minor reaches the "age of distribution" (again this varies by state) and takes control of the account. For more help on determining if custodial accounts are right for you, see this article on custodial accounts.

ShareBuilder also offers retirement accounts, including a Traditional IRA, Rollover IRA, Roth IRA, or Roth Conversion IRA. For tax year 2007, individuals can make IRA contributions of up to $4,000 per year (or $5,000 if 50 or older). For tax year 2008, individuals can make IRA contributions of up to $5,000 per year (or $6,000 if 50 or older). IRAs receive special tax treatment, but there are restrictions on withdrawing money from the account before retirement. ShareBuilder's Retirement Planning section can help you find the best type of account for you.

Opening Your First Account

It's easy to open your ShareBuilder Account. You can do it all online in just a few minutes, so apply today! You will need the following information for each account owner:

  • Full Name
  • Date of Birth
  • Social Security Number
  • Home Address
  • Phone Number
  • Email Address

Funding Your Account

Once you've opened your account, you'll need to deposit funds into it before you can purchase any stocks. Most investors fund their ShareBuilder Accounts through regular automatic transfers from their checking or savings account. You can also fund your account through payroll deductions, mailing a check, or wiring money.

When you apply for an account, you can set up automatic transfers from your bank accounts at the same time. All the information you need can be found on a check from your checkbook. Or, if you prefer, you can come back at any time to set up or change the amount of your regular transfers.

Starting Your Plan

Your next step is to decide what securities to purchase in your account. If you need help choosing investments, PortfolioBuilder can help. Just answer some questions about your risk tolerance and investing style, and PortfolioBuilder will use your answers to help you build a diversified portfolio. You can customize your plan and change it at any time.

Don't Delay -- Start Today

The most important lesson of all may be this: you'll never be able to reap any of the potential benefits of investing unless you get started. When you grasp the long-term nature of investing in the stock market, you'll realize that there are always opportunities you can take advantage of within your portfolio -- no matter what's happening in the world or whether the overall market is up or down. With a systematic investing plan that works through all cycles of the market, you won't have to stress about finding the right time to invest. There's truly no time like the present to start on the path to financial freedom.