Sharing the Wealth
A New (and Cheap) Way for Novice Investors to Buy Stocks
By Kara Stefan
For so long I had been missing out on the benefits
of investing in the markets because I dont have
large sums of money to play with. But with Sharebuilder,
I was able to start right away with a very small amount
of money. I also plan to start investing for my toddler
daughter and let the power of time work for her.
- Leslie A. Cox,
So you dont own shares of Yahoo and you didnt
get in during the early days of IBM. And well, okay,
maybe you live pretty much paycheck to paycheck and
dont have much discretionary income to invest.
And with the little you do have--whats the point?
I know that I get embarrassed buying only five shares of
Microsoft at a time. I feel like a pauper trying to scrape
together enough money for a decent meal. Well, the point is
this: a little can go a long way. And theres a Web site
that can help you get there.
takes the automatic investment strategy and applies it to
stocks. If you contribute to your 401(k) plan at work, youre
already using this technique. Just as money is taken out of
each paycheck and invested in your retirement plan, the Sharebuilder
process works the same way.
Only with Sharebuilder, you dont need a lot of money.
Theres no minimum investment like there is with mutual
funds. To open an account, you dont need the minimum
$5,000 like you do with, say, a Schwab account. You can start
today with as little as you can afford to commit on a monthly
My 13-year old son, the mower of all lawns, has committed
to $20 a month. Not a bad deal for me, because once the season
changes and the grass stops growing, hes going to do
chores around the house to maintain his income flow.
A particularly nice feature about Sharebuilder is that it
encourages your children to invest. You can open a custodial
account for each of your children, and the trade price is
half the normal price--$1 a buy. Not that doubling the price
for grown-ups--$2 a share--is going to break anyone.
Sharebuilder is just like any other broker-dealer,
says Brian Ratzliff, vice president of marketing at Sharebuilder.com.
Were governed under the same laws like Charles
Schwab or Merrill Lynch. Only this online investing
Web site actually encourages business from lower net worth
investors whom other brokerages tend to view as a nuisance--as
evidenced by their high minimums.
Sharebuilder is also the only broker out there whos
handling partial shares. So if you cant afford to cough
up $110 for IBMs going rate per share, you can buy a
fraction of a share. And next month, a fraction more. And
in a few months, youll be a full-fledged owner of a
whole share. Then you start working on your next share.
Ratzliff explains that what distinguishes the Sharebuilder
account holder is while they may not have a substantial amount
of income to invest, they know they should be doing something.
Its that mindset--Sure Ive got my
401(k), but I should be investing in the stock market as well,
There are several reasons why you should get started:
- If you hope to buy a house or send your kids to college
some day, you need to have a non-retirement investment plan
so you may withdraw money without incurring tax penalties.
- Sharebuilder allows you to take advantage of the dollar
cost averaging strategy when prices fluctuate--in the long
run, investing small bits every month can lower your overall
cost per share.
- Systematic investing develops a forced discipline that
will stay with you throughout your life and help build your
More Than a Trading Site
Sharebuilder also has a host of innovative tools that prompt
you to think about money and your future. For example, there
are separate calculators that allow you to input variables
and come up with answers to questions such as:
- "What will it take to save for a car, home, etc.?
- What will it take to save for a college education?
- What will it take to become a millionaire?
- Which are better: Income or growth stocks?
Personally, I benefited from the college calculator. Since
my son will be ready for college in 6 years, and Ive
been a little lax in this area, Im throwing all of my
resources towards this particular goal for the time being.
When I entered my monthly contribution, years to invest, and
expected rate of return, it turns out Ill overhit my
mark. The tool actually recommended I decrease my monthly
investment to reach my goal! Tell me that doesnt feel
Another thing you should know is that you can get started
online in less than 10 minutes. All you need is to know your
Social Security number and have your checkbook on hand--the
Sharebuilder prompts show what numbers to input to set up
an automatic contribution.
Like my son, you can start out with $20 a month. Who cant
afford that? Or you can be a worrywart, like myself, and go
overboard. Either way, you can officially become a stock investor
today. Nice to finally have something in common with the Bill
Gates of the world.