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Sharebuilder
When it became possible to buy and sell stocks on-line, I opened an account with one of the brokers offering such services. That was fun, and I even made a little money with some underperforming stocks that regained ground, but for the most part, I couldn't invest in the stocks I wanted to buy because their per-share prices were too high for my available capital. I was playing with just a few thousand dollars, and it's very hard to spread your risk without investing much, much more.
Sharebuilder is a stock investment tool that allows you to buy fractional shares of stocks you pick.
Before going any further, I need to say that the "load" or what you pay to them that doesn't go into your stocks, is high: up to $4.00 per investment made. That's regardless of the value of your investment, so if you were (for example) buying $200.00 worth of Google your fee is only 2%, but if you were buying only $20.00 worth, your fee is 20% - that's a lot of ground to make up.
However, that's for making a single purchase. Instead, you can set up either their "Basic" or "Advanced" plan. The first gives you 6 trades per month for $12.00, the second is 20 trades for $20.00.
How it works is simple enough. You pick your stocks, and you decide how much you are going to put into each one. Let's say you break it up like this:
| Stock | Amount |
|---|---|
| Apple Computer | $ 50.00 |
| EMC Corp | $ 50.00 |
| Intel Inc. | $ 50.00 |
| VMware | $ 50.00 |
| Google, Inc. | $ 50.00 |
| Microsoft | $ 50.00 |
That's six stocks, so you'd probably choose the $12.00 per month plan, and your actual net going into each stock would be $48.00 per month. If Apple is at $144.00 a share, you'll be buying 1/3 of a share with that investment. After a year (assuming it stayed at that level), you'd own 4 shares.
On the other hand, with Google currently over $500.00 a share, you'd end up with only a little more than one share of that after a year.
Of course share prices don't stay the same, so you'd actually be buying different fractions throughout the year - your purchase will be made at the prices in effect each month.
Effectively, you are building your own high load mutual fund (4% load in the above example), though with one important difference: you are controlling what gets bought and sold. No doubt most of us would be far smarter to let the mutual fund make those decisions for us, but this can be fun and if you are lucky or smart or both, even profitable.
I've played with Sharebuilder for the past seven years and while I probably would have done better with a mutual fund, I have made a little money and it's been great fun seeing my picks pan out. The ability to invest in fractional shares lets me have positions in stocks (like Google) that would otherwise eat up too much of the small amount I have available for this kind of investing. That makes the relatively high load palatable to me.
Send comments and new posts to tony@aplawrence.com
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